Bernstein downgrades Palo Alto Networks after 100% rally

Shares of Palo Alto Networks tumbled on Friday, September 18, after research firm Bernstein downgraded the cybersecurity company to Market Perform from Outperform, pointing to stretched valuations across the industry.

Bernstein analyst Peter Weed raised the firm's price target on the stock to $351 from $253. The updated target remained below the stock's previous trading level. Bernstein noted that cybersecurity equities have largely priced in expected growth after climbing roughly 100% since early 2026.

Selling pressure also followed news that a company director sold shares at around $377 each. The stock dropped to an intraday low of $359.07, down from its 52-week high of $398.88.

The broader cybersecurity sector continues to benefit from demand tied to artificial intelligence investments. However, the pullback highlights valuation risks as investors assess whether Palo Alto Networks can grow earnings and cash flow quickly enough to support its current price.