PANW vs. OKTA: Which Cybersecurity Stock Has an Edge Right Now?

Palo Alto Networks PANW and Okta Inc. OKTA are both U.S.-based cybersecurity companies that specialize in protecting enterprises from evolving digital threats. While PANW focuses broadly on next-gen firewalls, cloud security and AI-driven threat detection, OKTA focuses on identity and access management, providing cloud-based solutions that help businesses safeguard user data.

Palo Alto Networks and Okta are capitalizing on the rapid improvement of the cybersecurity space, fueled by the rise of complex attacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.28% from 2026 to 2031.

With this strong industry growth forecast, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.

The Case for PANW Stock

Palo Alto Networks remains a cybersecurity leader, offering solutions for network security, cloud security and endpoint solutions for customers who need full enterprise security support. Its next-generation firewalls and advanced threat detection technologies are widely recognized and adopted globally.

Palo Alto Networks’ wide range of innovative products, strong customer base and growing opportunities in areas like Zero Trust, Secure Access Service Edge (SASE) and private 5G security continue to support its long-term growth potential. For example, in the second quarter of fiscal 2026, SASE was Palo Alto Networks’ fastest-growing segment, with SASE Annual recurring revenues (ARR) increasing 40% year over year. Growth is mainly coming from customers who want to reduce the number of security tools they use.

Many organizations are moving away from older SASE products that do not provide a full view of their networks, cloud workloads and remote users. A notable example during the second quarter includes a global automotive leader selecting PANW for a major security transformation. The deal was worth over $50 million, including about $30 million for SASE and $20 million for XSIAM to run the company’s global security operations center.

PANW's near-term prospects are expected to be weighed down due to integration and acquisition-related costs. PANW recently completed two major acquisitions, which include its $25 billion CyberArk deal and $3.35 billion Chronosphere acquisition. As a result, PANW is incurring high integration-related costs, including onboarding employees, aligning go-to-market teams and integrating systems and operations. Acquisition-related cost in the second quarter amounted to $24 million, a whopping increase from $5 million incurred in the prior quarter. These costs are expected to hurt the company's profitability before the benefits of synergies from acquisitions are fully realized.

Equity dilution effect is expected to significantly hurt PANW’s bottom line. In the second quarter of fiscal 2026, PANW issued 112 million shares as part of the CyberArk deal. This is expected to result in a significant equity dilution effect, hurting the company’s bottom-line results. Management expects fiscal 2026 earnings per share (EPS) to be in the range of $3.65-$3.70, down from its prior guidance of $3.80-$3.90 per share.

The Case for OKTA Stock

Okta’s latest financial results for the fourth quarter of fiscal 2026 highlight its strengthening position as a leader in identity security. Its broad portfolio, which includes Okta Identity Governance, Privileged Access, Identity Threat Protection with Okta AI, Identity Security Posture Management, Okta Device Access and Fine-Grained authorization, continues to drive customer wins and expand its addressable market.

In the fourth quarter, Okta’s revenues and EPS soared 11.6% and 15.4%, respectively, year over year. It exited the quarter with more than 20,000 customers and $4.83 billion in remaining performance obligations, reflecting strong growth prospects for subscription revenues. Customers with more than $100K in Annual Contract Value increased 6% year over year to 5,100.

Okta is focusing on agentic identity as an important part of its long-term strategy. During its last earnings call, the company introduced Auth0 for AI agents and Okta for AI agents to help customers manage and secure security systems against attacks from AI agents. As companies adopt artificial intelligence, identity will become a core layer to track what agents are doing, what they can access and how they connect to systems. In the fourth quarter, these newer products contributed to 30% of total bookings, resulting in an average contract uplift of 40%, demonstrating strong early wins.

Okta is also benefiting from a rich partner base that includes the likes of Amazon Web Services, CrowdStrike, Google, LexisNexis Risk Solutions, Microsoft, Netskope, Plaid, Proofpoint, Salesforce, ServiceNow, VMware, Workday, Yubico and Zscaler. The above-mentioned factors are likely to continue driving growth in OKTA’s top and bottom lines. The Zacks Consensus Estimate for Okta’s fiscal 2027 revenues and earnings indicates year-over-year growth of 8.9% and 7.7%, respectively.

PANW vs. OKTA: Earnings Estimate Trend

The earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward Okta.

The Zacks Consensus Estimate for PANW’s fiscal 2026 and 2027 EPS is pegged at $3.73 and $4.07, respectively. The estimates for fiscal 2026 and 2027 have both been revised downward by 11 cents and 25 cents, respectively, over the past 30 days.

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The Zacks Consensus Estimate for Okta’s fiscal 2027 and 2028 EPS is pinned at $3.77 and $4.20, respectively. The estimates for fiscal 2027 and 2028 have both been revised upward by 13 cents and 25 cents, respectively, over the past 30 days.

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PANW vs. OKTA: Price Performance and Valuation

In the past six months, shares of PANW and OKTA have plunged 10.2% and 11.2%, respectively.

PANW Vs. OKTA: 6-Month Price Return Performance

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Currently, Okta is trading at a forward sales multiple of 4.44X, lower than Palo Alto Networks’ forward sales multiple of 11.04X. Okta’s reasonable valuation makes it more attractive for investors looking for value and stability.

PANW vs. OKTA: Forward 12-Month P/S Ratio

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Conclusion: OKTA Has an Edge Over PANW

Both Palo Alto Networks and Okta are key players in the cybersecurity space, but their near-term outlooks are quite different. Palo Alto Networks faces near-term risks from rising integration costs due to large acquisitions, share dilution is meaningful, and downward revision of EPS guidance for fiscal 2026. These could hurt PANW’s prospects in the near term.

Okta shows steadier execution, where the company is witnessing strong adoption of its security product and its earnings estimates are being revised upward. Okta’s reasonable valuation offers some downside protection as well, giving OKTA a clear edge over PANW for investors seeking exposure to cybersecurity growth at a fair price.

Currently, Okta and Palo Alto Networks carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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