Quick Facts
- Palo Alto Networks CEO says consumers outpace enterprises in AI adoption but expects businesses to catch up slowly
- Company reported Q2 2026 revenue of $2.6 billion, up 15% year over year, beating analyst expectations
- Palo Alto closed three major acquisitions including $25 billion CyberArk deal and announced $400 million Koi acquisition
Palo Alto Networks CEO Nikesh Arora said enterprise AI adoption trails consumer use but expects businesses to gradually embrace the technology as the cybersecurity company reported strong second quarter earnings.
“Consumers are far outstripping enterprise for the moment, but we expect enterprise will surely and slowly get on that bandwagon,” Arora said during the company’s earnings call this week.
The Santa Clara-based company posted fiscal second quarter 2026 revenue of $2.6 billion, a 15% increase from the prior year. Adjusted earnings reached $1.03 per share, beating analyst estimates of 94 cents per share. Next-Generation Security ARR grew 33% year over year to $6.3 billion.
Arora compared business AI adoption to the cloud computing transition, which took two to three years before enterprises began migrating applications at scale. He noted limited enterprise AI applications currently drive significant throughput beyond coding tools.
“Right now, tell me how many enterprise AI apps are you using which are driving tremendous amounts of throughput. I can’t think of anything but coding apps,” Arora said.
Despite slower enterprise adoption, Palo Alto Networks sees growing AI-related network traffic from business customers. The company observes clients running millions of tokens in specific applications developed with large language model providers.
The cybersecurity firm completed several major acquisitions to strengthen its AI security capabilities. It closed a $25 billion purchase of Israeli identity security company CyberArk and a $3 billion acquisition of cloud observability platform Chronosphere. This month, Palo Alto announced plans to acquire Koi, an endpoint security company, for approximately $400 million.
“AI agents and tools are the ultimate insiders. They have full access to your systems and data, but operate entirely outside the view of traditional security controls,” said Lee Klarich, Chief Product & Technology Officer.
Market data shows mixed enterprise AI progress. While 88% of organizations worldwide use AI in at least one business function, many struggle to move beyond pilot programs. Research indicates 74% of companies had not seen tangible value from AI initiatives as of 2024.
Palo Alto Networks processes an average of 2.3 million new threats daily and blocks 11.3 billion threats per day. The company expects continued growth as enterprises modernize security infrastructure to support AI implementations.
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