Palo Alto Networks hits a big milestone. Why cybersecurity stocks are so hot right now.

By Hannah Pedone

An analyst says that investors have become more 'discerning' as they look to separate AI losers from winners

Shares of Palo Alto Networks were up roughly 2% on Monday afternoon.

Cybersecurity stocks have been staging a big comeback, now evidenced by a fresh milestone for Palo Alto Networks.

Palo Alto Networks (PANW) is the latest company to see its market capitalization top $200 billion, closing above the threshold for the first time on Monday, according to Dow Jones Market Data.

Shares of Palo Alto Networks finished up 1.9% on Monday, closing at an all-time high as they sealed their best eight-day stretch on record. They've gained 33% over that run.

The Amplify Cybersecurity ETF (HACK) closed up 2.6% on Monday. Shares of fellow cybersecurity companies CrowdStrike Holdings (CRWD) and Zscaler (ZS) gained 4.2% and 8.5%, respectively.

On Monday, Rosenblatt analyst Catharine Trebnick raised her price target for Palo Alto Networks shares to $275 from $225, writing in a note that there's a growing conviction in the platform's "emerging role as a preferred AI security-architecture partner."

She wrote that one catalyst for the stock has been OpenAI's launch of Daybreak, a cybersecurity initiative combining OpenAI models, Codex - OpenAI's AI agent - and a number of cybersecurity partners including Palo Alto Networks. Shares could also basking in the glow of the major cybersecurity conference CyberArk Impact 2026, she said. Both took place last week.

Trebnick added that she sees continued evidence that the company's strategy to consolidate its cybersecurity offerings into one platform and prioritize its focus on AI security has been resonating with customers.

She expects Palo Alto Networks, along with CrowdStrike, to benefit as companies increase spending on AI security in the coming years. She also noted that OpenAI and Anthropic have not shown evidence of building "comprehensive governance and security layers." This serves as an advantage for incumbent security platforms with proprietary data like what Palo Alto Networks has.

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Stephens analyst Todd Weller told MarketWatch that broad-based strength in software and cybersecurity was also buoying the stock on Monday.

He said that sentiment for cybersecurity stocks six weeks ago was "extremely tough," adding that there was "a lot of negativity around AI" and how it might impact the software sector. Now the market has become more "discerning" in identifying AI beneficiaries, Weller added. Investors have come to favor Palo Alto Networks and CrowdStrike, as they are among a small cohort of companies with access to Anthropic's Mythos cybersecurity model through Project Glasswing.

He said that while Palo Alto Networks has its roots in the network-security space, the company has set itself apart by expanding into cloud and identity security, with its acquisition this year of the identity-security provider CyberArk.

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-Hannah Pedone

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05-18-26 1742ET