Okta and Palo Alto Networks Shares Plummet, What You Need To Know

What Happened?

A number of stocks fell in the morning session after peer, Zscaler, reported fiscal Q3 2026 earnings the prior evening, which featured a top-and-bottom-line beat but clouded by rising memory, storage, and processor costs, as well as turnover in its sales department. 

The sector had been on a record-breaking run with eight consecutive intraday highs at CRWD, so the earnings results landed against stretched positioning. The quarter itself was strong: revenue grew 25% to $850.5 million, adjusted EPS of $1.08 beat consensus by 7%, and non-GAAP operating margin hit a record 23%. 

However, higher hardware capex from ZS's data center buildout was a worry, suggesting margins may compress just as growth slows. Notably, sales guidance for the next quarter was roughly inline. This raised concerns about a potential slowdown across the cybersecurity industry, dragging down other major players like Palo Alto Networks and CrowdStrike.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Identity Management company Okta (NASDAQ:OKTA) fell 3.7%. Is now the time to buy Okta? Access our full analysis report here, it’s free.
• Network Security company Palo Alto Networks (NASDAQ:PANW) fell 2.9%. Is now the time to buy Palo Alto Networks? Access our full analysis report here, it’s free.

Zooming In On Okta (OKTA)

Okta’s shares are quite volatile and have had 16 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 9 days ago when the stock gained 3.5% on the news that investor confidence rebounded as markets softened their view on the existential threat AI poses to traditional software companies. 

After a period of significant underperformance, dubbed the "SaaS Rout of 2026," where software stocks traded at a discount to the S&P 500, the prevailing fear that AI would completely disrupt and replace traditional Software-as-a-Service (SaaS) companies began to subside. Experts noted that these companies possess significant advantages, including established enterprise relationships, vast amounts of proprietary data, and deep integration into customer workflows, which AI is unlikely to erase overnight. This changing perspective suggests a potential re-rating for the sector as investors realize these companies may be well-positioned to integrate and leverage AI rather than be replaced by it.

Okta is up 7.6% since the beginning of the year, but at $90.02 per share, it is still trading 28.3% below its 52-week high of $125.50 from May 2025. Despite the year-to-date gain, investors who bought $1,000 worth of Okta’s shares 5 years ago would now be looking at only $404.75.

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