By Adam Clark

Palo Alto Networks and CrowdStrike were dropping early Wednesday after cybersecurity peer Zscaler gave disappointing sales guidance. But that shouldn't dissuade investors from backing the sector's giants, according to Wall Street analysts.

Zscaler was down 24% in Wednesday's premarket after a poorly-received earnings report. That looked to be casting a pall over the cybersecurity sector, with Palo Alto dropping 4.2% and CrowdStrike down 3.3% ahead of their own earnings reports next week.

That presents a chance at a bargain, according to Wedbush analyst Dan Ives.

"We view the Zscaler guidance shortfall after the bell as company specific execution issues and not an indicator of broader sector issues, " Ives wrote in a research note.

In fact, Ives -- who is famously bullish on technology stocks -- is only getting more positive, raising his target price on Palo Alto to $300 from $225 and his target on CrowdStrike to $700 from $550, reiterating an Outperform rating for both.

He isn't alone in his opinion.

"We think much of noise in Zscaler's print is idiosyncratic (sales leader departures, confusing guidance philosophy with Red Canary, etc.) and continue to expect solid reports from Palo CrowdStrike, and Okta," wrote Stifel analyst Adam Borg in a research note.

The persistent concern for cybersecurity companies is how artificial intelligence will affect the sector and whether it will make existing products obsolete. Barron's argued in our recent Palo Alto stock pick that AI would be more of a positive than a negative, and Wall Street largely agrees.

"Our recent checks in the field reinforced our view that AI will be the biggest growth catalyst for the cyber industry in the past 20 years rather than its demise, with 8 of every 10 customers we have spoken with believing the incumbent cybersecurity vendors with the right products and AI strategic roadmap will be the winners," Wedbush's Ives wrote.

Write to Adam Clark at adam.clark@barrons.com

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May 27, 2026 09:08 ET (13:08 GMT)

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