Most people have put off a phone update at least once. For a company, the same delay can cost millions and endanger customers.
Equifax (EFX) learned that the hard way. The credit bureau failed to patch a critical flaw it was warned about in March 2017, according to the Federal Trade Commission. The breach hit about 147 million people, and Equifax later agreed to pay at least $575 million to settle.
Palo Alto Networks (PANW) CEO Nikesh Arora sees the same risk building today. On the company’s earnings call on Tuesday, Sept. 1, 2026, he was direct.
“I suspect there will be some major breaches over the coming years,” Arora said.
He tied it to companies that haven’t finished upgrading their defenses. He told CNBC’s Jim Cramer that roughly $1 trillion of security systems built before AI need an overhaul. “You have to rethink your cyber architecture,” he said.
Also read: Palo Alto CEO wants AI labs out of the ‘fear-mongering business’
That warning is important because Palo Alto sells the fix. The company makes firewalls, security software, and cloud tools for corporate networks, according to a Bank of America research note shared with TheStreet. It reports fiscal first-quarter results after the market closes on Wednesday, Nov. 18, 2026.
Companies know the risk but move slowly
The same call carried a quieter admission. Answering Morgan Stanley analyst Meta Marshall, Arora said customers already have packed agendas. So they replace old systems in stages, usually over one to three years.
That is the tension inside the stock. Arora’s warning sells urgency, yet his customers buy on their own clock. Investors are paying as if urgency wins.
Wall Street wants a big beat on Nov. 18
Bank of America analyst Tal Liani laid out the stakes on Wednesday, Nov. 11, 2026. His note is titled “1Q27 Preview: High expectations as usual, but recent pullback should help.” Shares soared more than 140% in the six months before Palo Alto’s September report, then fell 9% the next trading day, the note said.
The stock has since pulled back about 25% from its October high, easing expectations a bit. Even so, Palo Alto is valued at about 18 times expected 2027 sales, compared with about 7 times for its peers.
Liani thinks that gap means the company likely needs to beat forecasts by about 3% and raise its outlook to lift the shares.
The first figure to watch is recurring revenue from Palo Alto’s newer security products. Wall Street expects $9.55 billion, up 63% from a year earlier, according to the note. The forecast implies about $450 million of new yearly business in a single quarter.
Palo Alto Networks CEO Nikesh Arora expects major breaches as companies delay security upgrades.NurPhoto / Getty Images
Higher chip costs are squeezing profits
Margins are the second worry. Liani expects gross margin, the share of sales left after direct costs, to slip to 74.6%. He blamed higher cloud and component costs for the 2.3 percentage point drop from a year earlier.
CFO Dipak Golechha warned on the September call that memory and storage costs would keep rising for Palo Alto’s hardware. That ties the company to the broader memory shortage hitting phones.
More Palo Alto:
Palo Alto CEO wants AI labs out of the ‘fear-mongering business’
Palo Alto Networks CEO drops blunt take on AI slowdown calls
Palo Alto CEO has urgent warning for anyone using AI
Firewalls, the gatekeepers that screen traffic into company networks, are the next test.
Palo Alto’s firewall bookings rose 17% in fiscal 2026, according to the note. However, rivals Fortinet (FTNT) and Check Point (CHKP) have shown signs of slowing after a strong first half of 2026.
Liani believes Palo Alto is winning share, with upgrades spread over several quarters. If he is wrong, this year’s firewall strength may prove a temporary bump.
Most analysts still rate Palo Alto a buy
Bank of America kept its Buy rating and $420 target, implying about 29% upside, according to the note. The stock has traded between about $140 and $432 over the past year, the note shows, a sign of how fast sentiment swings.
Of 55 analysts tracked by StockAnalysis, 42 rate the stock a Buy or Strong Buy, 12 say Hold and one says Strong Sell. Their average price target is $399, below Bank of America’s.
Most of the newest calls held steady. Citi’s Fatima Boolani reiterated a Buy rating and a $440 target on Wednesday, Nove. 11, 2026, according to StockAnalysis. Jefferies analyst Joseph Gallo was the exception, trimming his target to $400 from $450 a day later but keeping a Buy.
Liani flags competition and execution as key risks. His model shows revenue growth of about 23% in fiscal 2027. Growth slows to about 13% the next year, as the boost from Palo Alto’s recent big acquisitions fades.
For everyday people, the risk is personal. Their data sits inside the systems Arora says are overdue for repair.
Security is shifting from an optional expense to a basic cost of doing business, much like insurance.
The bigger question is speed. Equifax showed what waiting costs, and Palo Alto’s Nov. 18 report will show whether companies have stopped waiting and started taking action.
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