Why Palo Alto Networks Stock Keeps Going Down

Palo Alto Networks (NASDAQ: PANW) banal took its investors connected a rollercoaster thrust this week, surging Tuesday greeting amid rumors of a collaboration betwixt artificial quality elephantine Anthropic and cybersecurity companies specified arsenic Palo Alto -- past crashing yesterday connected worries these rumors whitethorn beryllium false.

Palo Alto continues to descent successful Friday greeting trading, down 7.1% arsenic of 10 a.m. ET.

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Here's the basal communicative of what's happening, arsenic retold by Benchmark expert Yi Fu Lee: On Tuesday, April 7, Anthropic yet unveiled its Claude Mythos general-purpose connection model, demonstrating the LLM's "significant capabilities successful identifying information vulnerabilities" -- i.e., cybersecurity.

Investors had been worrying astir Mythos for weeks. But connected the day of the reveal, the communicative changed to 1 of however Anthropic's Mythos could beryllium good news for Palo Alto, by (1) highlighting the menace to cyber from AI-enabled hackers, astatine the aforesaid clip arsenic imaginable usage of Mythos by companies similar Palo Alto would grow request for cybersecurity.

Lee believes Mythos's accomplishment volition turn the yearly marketplace for cybersecurity products by astir $1 cardinal annually. Investors, some yesterday and today, look little definite astir that -- but honestly, cipher knows however this volition play out.

What we bash cognize is this:

Palo Alto already does astir $10 cardinal successful yearly business, truthful a $1 billion-a-year bump successful the full addressable marketplace -- not each of which volition spell to Palo Alto -- won't beryllium a world-changing lawsuit for Palo Alto, if it adjacent happens. Meanwhile, Palo Alto stock's selling for astir 100 times earnings, with yearly net maturation projected successful the debased teens.

I spot a full batch much hazard than reward successful this one.

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