Palo Alto Networks (PANW) is in a transition year as platformization deals with cloud penetration are expected to lead to "strong deal flow and a more stable pipeline," Wedbush Securities said in a note to clients Wednesday.

The cybersecurity company, which reported fiscal Q3 results Tuesday that beat analyst forecasts, is expected to be a prime beneficiary of AI spending, Wedbush said.

"The platform approach in cybersecurity is the right long-term move and [Palo Alto Networks] will ultimately emerge from this transition in a stronger market position," analysts including Daniel Ives wrote in the note. "Overall, PANW continues to be one of our favorite cybersecurity names to own over the next 12-18 months."

The firm said it maintained its outperform rating and $225 price target.

Shares of Palo Alto Networks were down more than 7% in early trading Wednesday.