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Wall Street doesn't always get things right, but when analysts reach a clear consensus on a particular stock, it can pay to listen. The overwhelming majority of the analysts tracked by The Wall Street Journal think Palo Alto Networks (NASDAQ: PANW) stock is a buy, and their bullish ratings might be completely justified.

Artificial intelligence (AI) is a revolutionary technology, but it can cause a devastating amount of damage in the wrong hands. According to Palo Alto's Unit 42 research division, hackers are using AI to launch cyberattacks four times faster than before, allowing them to steal valuable corporate data in under one hour in some cases.

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Fortunately, Palo Alto continues to launch new cybersecurity products to help enterprises defend their valuable assets, and they are in very high demand. Investors can buy Palo Alto stock for under $190 as I write this, and here's why it could be a great addition to any diversified portfolio.

Palo Alto offers dozens of enterprise-grade cybersecurity products spread across three platforms: Cloud security, network security, and security operations. It's embedding AI into many of its existing solutions, but it's also creating entirely new products to help its customers safely enter the AI era.

The company knows humans can't respond to threats as fast as algorithms can, so it launched the Cortex XSIAM platform, which introduces AI-powered automation into corporate security operations centers. Palo Alto says that 60% of XSIAM customers are now remediating threats in under 10 minutes, on average, compared to days or even weeks previously. At the end of Palo Alto's fiscal 2026 second quarter (ended Jan. 31), the platform's customer base tripled to 600 enterprises, and they had an average annual spend of almost $1 million each.

But Palo Alto is also protecting companies using AI. In March, it launched a product called Prisma AIRS (AI Runtime Security) 3.0, which allows enterprises to monitor the behavior of AI agents whether they are operating in cloud networks, software applications, or in local endpoints. It scans every agent's architecture for vulnerabilities, which is critical because if even one of them is compromised, a hacker would immediately have access to the enterprise's sensitive data.

The cybersecurity industry was highly fragmented in the past, meaning vendors often specialized in specific products, so enterprises had to deal with multiple providers to build a complete security stack. This approach won't work in the AI era, because chatbots and agents are constantly moving between different apps and systems. One unified cybersecurity suite is required to keep track of every possible vulnerability.

Palo Alto has become that holistic vendor. At the end of Q2, the company considered 1,550 of its customers to be "platformed," meaning they were effectively using Palo Alto as their primary cybersecurity vendor. That number was up 35% from the year-ago period, and there was minimal churn among this customer cohort, suggesting that enterprises tend to stick around once they go "all-in" with Palo Alto.

Moreover, platformed customers had a net revenue retention rate of 119% during the quarter, so they were spending 19% more money during the period compared to the same time last year. In other words, these customers become significantly more valuable over time.

Palo Alto's overall Q2 revenue grew by 15% to $2.6 billion. However, its next-generation security (NGS) portfolio, which includes AI products like XSIAM, ended the quarter with $6.3 billion in annual recurring revenue (ARR), up 33%. This indicates that organizations are quickly realizing the value of AI-powered cybersecurity.

The Wall Street Journal tracks 55 analysts who cover Palo Alto stock, and 41 have given it a buy rating. Five others are in the overweight (bullish) camp, while eight recommend holding, and just one recommends selling. The analysts have a consensus price target of $207.75, which implies a fairly modest upside of 13% over the next 12 months or so. However, the Street-high target of $265 points to a much higher potential return of 45%.

I think both targets are achievable based on Palo Alto's valuation. Its price-to-sales (P/S) ratio is 13.1, which is a steep discount to the P/S ratio of its main rival in the AI-powered cybersecurity space, CrowdStrike.

Palo Alto's NGS ARR of $6.3 billion is higher than CrowdStrike's total ARR of $5.3 billion, and it's also growing significantly faster (33% versus 24%). Therefore, I don't think CrowdStrike's P/S ratio deserves such a hefty premium. I'm not suggesting that Palo Alto is guaranteed to close the gap completely, but even covering half the distance would result in a 41% gain in its stock, without factoring in any further revenue growth.

As a result, Palo Alto stock might be a great buy right now, particularly for anyone who is looking for a unique way to invest in the AI revolution.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.

1 No-Brainer Artificial Intelligence (AI) Stock to Buy With $190, According to Wall Street was originally published by The Motley Fool