Palo Alto Networks Reverses Lower on Earnings While HPE Soars on AI Networking

Palo Alto Networks posted 31% YoY revenue growth to $3.0 billion in Q3 FY2026 HPE delivered a record $10.7 billion quarter with 40% revenue growth tied to

Dipendra Singh

— 2 min read
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Palo Alto Networks Reverses Lower on Earnings While HPE Soars on AI Networking

Hero: Stock market trading floor with digital overlays showing Palo Alto Networks stock dipping while HPE AI server revenue surges, June 2026 earnings theme

Summary

  • Palo Alto Networks posted 31% YoY revenue growth to $3.0 billion in Q3 FY2026
  • HPE delivered a record $10.7 billion quarter with 40% revenue growth tied to AI servers
  • Stock prices diverged sharply after both companies reported results on June 2 2026

Palo Alto Networks and Hewlett Packard Enterprise reported earnings on June 2 2026. Palo Alto Networks shares fell despite a 31% revenue increase. Hewlett Packard Enterprise shares jumped nearly 20% on stronger than expected AI server demand.

Investors separated pure cybersecurity plays from AI infrastructure spending right away.

Palo Alto Networks results included a large contribution from its CyberArk acquisition. HPE benefited from pulled forward orders in its server and networking segments.

Context

AI infrastructure spending keeps reshaping tech stocks. Companies tied directly to servers and networking hardware posted faster growth. Security providers now face questions on how quickly AI tools will alter their own paths.

Both reports landed the same day. They triggered instant price moves.

The contrast shows earnings season now acts as a referendum on AI exposure rather than broad tech growth.

Details

Palo Alto Networks reported total revenue of $3.0 billion for fiscal Q3 2026, up 31% year over year. The figure included $388 million from CyberArk. Next-Gen Security ARR rose 60% and adjusted free cash flow margin reached 38.5%, according to the company 8-K filing.

Hewlett Packard Enterprise posted record quarterly revenue of $10.7 billion, up 40% from the prior year. The surge came from AI servers and contributions from the Juniper networking business. Market participants noted the beat exceeded expectations and prompted some analysts to raise near-term targets.

"HPE reported record $10.7B quarter with 40% revenue surge driven by AI servers and Juniper."

, Threads post (Threads)

Palo Alto Networks shares declined even after the earnings beat. Investors appeared to weigh longer-term implications of AI-driven cybersecurity changes against the current reported growth.

Reaction

Market participants focused on the split between hardware demand and software security spending. HPE shares rose sharply while PANW shares finished lower on the session.

Social Highlight · @marketwatch · 2026-06-02

PANW stock dipped despite earnings beat. (link)

Outlook

Investors will monitor subsequent AI infrastructure reports for confirmation that server demand remains elevated. Palo Alto Networks next quarterly update and any commentary on CyberArk integration will indicate whether cybersecurity growth can match hardware momentum.

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