As investors worry that existing software and services could be rendered obsolete, Palo Alto Networks CEO Nikesh Arora said the rapid acceleration of AI should not be considered a threat to cybersecurity.
Arora addressed the concerns on Tuesday during the company’s fiscal second-quarter conference call, where the surge in AI dominated much of the discussion.
“As AI becomes more pervasive across the enterprise, it expands the attack surface area, more infrastructure, more machine-to-machine activity and new classes of risk that simply didn’t exist before,” Arora said. “In that environment, security cannot sit on the sidelines.”
Arora said despite the current sentiment about software and AI, the company believes that security is the enabling layer “that allows innovation to move forward safely and at scale.”
Palo Alto Networks said fiscal second-quarter revenue rose 15% year over year, to $2.6 billion, and reported non-GAAP net income of $1.03 a share. Its stock, however, was hammered after the company provided a lower-than expected earnings forecast.
The company just completed previously announced deals to buy CyberArk for $25 billion and the $3.35 billion acquisition of Chronosphere. On Tuesday, the company announced a new deal to buy a startup called Koi, to help address demand for agentic endpoint security.
The company is now forecasting annual revenue to range between $11.28 billion and $11.31 billion for fiscal 2026 and non-GAAP net income to range between $3.65 to $3.70 per share.
During the conference call, Wall Street analysts raised a number of concerns about the potential impacts of AI on demand for cybersecurity software and services. Arora pushed back, arguing the embrace of AI creates new opportunities and said Palo Alto Networks was well-positioned to address those concerns.
One analyst asked whether existing fears echo concerns in 2018 and 2019 during the transition from on-premises to cloud security.
“I think this time, I’m still, you know, confused why the market is treating AI as a threat to at least cybersecurity, I can’t speak for all of software,” Arora said. “Because one thing we’re definitely seeing is that customers have figured out they need to drive more consistency in their security stack to be able to respond faster using AI.”
TD Cowen managing director and senior analyst Shaul Eyal, in a research note, agreed with Arora’s assessment that AI would help drive greater demand for cybersecurity and not pose a threat.
