By Emily Bary
Palo Alto Networks’ stock is falling after the announcement of a splashy deal that would give the cybersecurity giant a foothold in the identity business, which stands to benefit from AI
Palo Alto Networks Inc.’s security empire is set to grow further with the company’s newly announced cash-and-stock deal for CyberArk Software Ltd.
The cybersecurity giant announced the deal on Wednesday, saying that it would usher in its “formal entry into Identity Security,” establishing that technology “as a core pillar of the company’s multi-platform strategy.” As companies embrace new technologies and artificial intelligence, they need to ensure that both employees and AI systems are properly credentialed to access systems, which is where identity products come in.
“Our market entry strategy has always been to enter categories at their inflection point, and we believe that moment for Identity Security is now,” Palo Alto Networks (PANW) Chief Executive Nikesh Arora said in a release.
Palo Alto Networks has been pushing a “platformization” approach to sales, trying to become the destination for all things cybersecurity and to get customers to pay for a more varied suite of its services. This has been a hotly debated strategy on Wall Street for over a year, as Palo Alto Networks has given discounted product to some customers in hopes of winning fuller paid platformization business from them down the road.
The deal comes with a splashy price tag, with the company agreeing to pay CyberArk (CYBR) shareholders $45 in cash and 2.2005 shares of Palo Alto Networks for each CyberArk share, representing a $25 billion equity value for CyberArk. Palo Alto Networks expects the deal to close in the second half of its 2026 fiscal year.
See also: Google plans to buy cybersecurity company Wiz for $32 billion. Here’s why the startup is so valuable.
Bernstein analyst Peter Weed wrote that a price tag above $20 billion “would swamp Palo Alto’s aggregate [amount] paid for all prior acquisitions in the last 15 years” by about 5 times.
The Wall Street Journal reported on advanced CyberArk deal talks Tuesday afternoon.
Palo Alto Networks shares are down 8% in Wednesday morning trading after losing 5.2% in Tuesday trading in the aftermath of the report.
Following that report, Evercore ISI analyst Peter Levine wrote that Palo Alto Networks was “missing only two key components of the cybersecurity stack to be the consolidated cyber platform.” Those elements are identity, which CyberArk offers, and endpoint, which Palo Alto Networks plays into, “but not at a level we’d consider best-of-breed or competitive with leading solutions in the market,” according to Levine.
He noted that Palo Alto Networks recently acquired ProtectAI, which helps customers monitor access to capabilities. Combining that with CyberArk’s tools for governing access could allow Palo Alto Netwoks to offer businesses “an end-to-end solution for securing AI environments at scale.”
Some analysts thought the deal made sense in their Tuesday notes leading up to the official announcement.
“This news feels logical given it’s a reiteration of [Palo Alto Networks’] focus on building a platform and protecting the new attack surface” brought on by generative artificial intelligence, Jefferies analyst Joseph Gallo wrote following the Wall Street Journal report. He thought the deal would represent a continuation of the company’s “strategy of buying best-of-breed technology,” although in this case, CyberArk has “material” financials of its own. The company did about $1 billion in revenue last year.
But Bernstein’s Weed was more measured, acknowledging the attractive opportunity in the identity market, which stands to benefit from AI, while also flagging that CyberArk’s stock was “not trading at a discount.”
“We worry any upside from the AI tailwinds are years away at best, and adoption comes with technical risk,” he wrote in a Tuesday report.
-Emily Bary
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
07-30-25 0944ET
Copyright (c) 2025 Dow Jones & Company, Inc.