Investment Review №353. In Search of New Landmarks

Palo Alto Networks

Palo Alto Networks (PANW) delivered strong Q4 FY26 results, exceeding own guidance and market consensus, driven by accelerating execution on its platform strategy. Next-Generation Security ARR grew 63% YoY to $9.1bn, with roughly $1bn of net adds QoQ, validating enterprises’ shift from disparate solutions to unified architecture. Total RPO continued robust growth, rising 34% YoY to $21.2bn, supported by large, multi-year agreements and sustained demand across Network Security, SASE, and Cortex. A solid outlook for Q1 and full-year 2027 signals continued strong demand for cybersecurity structure consolidation. Key growth drivers remain expanding the customer base with deeper platform adoption, continued cloud migration, and rising needs to protect corporate data and models amid AI adoption.

 

Next-Generation Security ARR Growth.
Source: PANW IR presentation

 

Lululemon Athletica

Lululemon Athletica’s (LULU) stock has largely mirrored Nike’s (NKE) shares trend. The LULU stock is down over 50% year to date and more than 75% below its 2023 peak. The latest sell-off followed disappointing Q2 results: revenue decreased 4.3% YoY to $2.42bn, driven by an 8% decline in North America and a slowdown in international growth to 4% YoY. LFL sales dropped 12% YoY in North America and 2% YoY in Mainland China. Management attributed the decline to pressure on the brand, including negative media and social-media commentary. For Q3, the company guides North America sales down 15% YoY and total revenue 10–11% YoY lower. Management cut full-year sales guidance for a second consecutive time, now to $10.35–10.50bn, implying a 5–7% decline, and also scaled back its new-store opening plan.

LULU Share Price Performance. 
Source: FactSet

 

NVIDIA 

NVIDIA (NVDA) Q2 report on August 26 didn’t change the core investment thesis so much as it redirected the debate. Results beat across the P&L, but the shares barely moved until management issued the first-ever annual guidance—framed as a supply-capacity ceiling rather than a demand estimate. That disclosure shifts the discussion from whether the cycle will continue to whether Nvidia can physically meet demand. It also surfaced less comfortable issues: management lowered its gross-margin outlook on higher memory costs; cash conversion has weakened amid lengthening payment terms; and the balance sheet now carries an unprecedented (for the industry) stack of purchase obligations, strategic stakes in customers, and guarantees extended to them. None of these concerns is about growth; they relate to earnings quality and balance-sheet state.

 

Nvidia Revenue Forecasts Before and After the Quarterly Earnings Report, $bn.
Sources: Nvidia, FactSet, Freedom Broker

 

Tesla 

Tesla (TSLA) launched commercial operations of the Cybercab in Austin—a two-seat, fully autonomous robotaxi with no steering wheel or pedals. The unveiling disappointed investors due to limited detail on pricing, production cadence, and service expansion; shares lost about 6% post-event. Sentiment was further pressured by an NHTSA investigation reviewing the self-certification process for roughly 1,000 Cybercabs to ensure compliance with federal safety standards; only 45 have been registered in Texas to date. According to Bloomberg Intelligence, a dedicated Cybercab production line should let Tesla scale output without competing for Model Y capacity. Even so, analysts expect a gradual ramp-up, with limited near-term profit contribution and more meaningful robotaxi monetization likely beginning in 2027.

 

Tesla Gross Profit Through 2030, $mn. 
Source: Bloomberg Intelligence, Freedom Broker

 

PayPal

Bloomberg reports that Stripe and Advent have withdrawn their bid to acquire PayPal (PYPL). The consortium had offered $60.50 per share, implying a valuation of over $53 billion. Reuters adds that PayPal’s board deemed the offer inadequate, with sources also citing regulatory and financing hurdles. Following the withdrawal, PayPal shares fell 12.7% on August 28, indicating that deal expectations are a key driver of prices. The exit of the bidders lowers the likelihood of a near-term premium takeout and removes a key upside catalyst. The bar for management is now higher: PayPal must show that its standalone strategy can create more value than a sale. Investors focus shifts to upcoming results and execution of the transformation plan. While total payment volume grows, profits decline, leaving open whether the company can defend its competitive position and return to sustainable earnings growth under the new strategy.

 

PYPL Price and Trading Activity Amid Talks with Stripe and Advent.
Sources: FactSet, Bloomberg, Reuters