Microsoft, Cisco and Alphabet: Security as a FeatureThin moat

Palo Alto Networks (PANW) — moat facet

Microsoft, Cisco and Alphabet do not need to win security on its merits, because they include it in products customers already pay for.

The rivals Palo Alto cannot outsell on product are the ones that do not need to sell security at all. Its 10-K names "large companies that incorporate security or observability features in their products, such as Alphabet Inc., Cisco Systems, Inc., and Microsoft Corporation"1.

Network and AI Security revenue ($bn)~7.14FY2025, derived8.35FY2026Q4 FY2026 earnings call; FY2025 derived from 17% growth
The platform most exposed to bundles still grew 17%.

These companies compete by bundling. A customer already paying for productivity software, networking equipment or cloud computing may find security included, or offered at a small extra cost. The bundler does not need its security product to be the best; it needs it to be good enough that a customer stops paying a specialist.

Cisco alone was worth $420.67 billion2 against Palo Alto's $306.54 billion3. Cisco's own page in this collection describes the other side of this rivalry, including its purchase of Splunk to build a security business of its own.

Palo Alto's defence is that security bought as a bundle is rarely the best security, and that large customers facing serious threats will pay for a specialist. That argument is strongest in the network, where Palo Alto's Network & AI Security platform had revenue of $8.35 billion in fiscal 2026, up 17%4.

The bundlers also buy. Cisco's own page in this collection describes its purchase of Splunk to build security and observability, the same two markets Palo Alto entered with Cortex and Chronosphere. Palo Alto's 10-K names Cisco among the large companies that incorporate security or observability features5.

The bundlers are the rivals most able to wait. Network & AI Security grew 17% in fiscal 2026 and is guided to low double digits6. Growth below 10% would mean the bundled alternatives are taking the customers who buy on price.

Moat trajectory: Narrowing

Network & AI Security guided to low double digits after +17%.

The number that tests this moat
Reported
Network & AI Security revenue growth
17% (FY2026)

The platform most exposed to bundled security; growth below 10% would mean bundles are taking price-sensitive buyers.

Source: Palo Alto Networks Q4 FY2026 earnings call ↗
References
  1. ReportedIts 10-K names "large companies that incorporate security or observability features in their products, such as Alphabet Inc., Cisco Systems, Inc., and Microsoft Corporation".
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  2. ReportedCisco alone was worth $420.67 billion against Palo Alto's $306.54 billion.
    Companies Market Cap - Palo Alto Networks $306.53 billion; Cisco $420.67 billion and Check Point $13.39 billion. — September 2026 · publ. September 2026 · source ↗
  3. ReportedCisco alone was worth $420.67 billion against Palo Alto's $306.54 billion.
    Palo Alto Networks (PANW) market data - $374.74 at the close on 25 September 2026, market value $306.54 billion, trailing P/E 998.49, forward P/E 89.46, 52-week range $139.57-$398.88. — September 2026 · publ. 25 September 2026 · source ↗
  4. ReportedThat argument is strongest in the network, where Palo Alto's Network & AI Security platform had revenue of $8.35 billion in fiscal 2026, up 17%.
    Palo Alto Networks fourth-quarter fiscal 2026 earnings call transcript (Motley Fool) - platform revenue, platformized cohort retention, large deals and fiscal 2027 modelling points. — Q4 FY2026 · publ. 1 September 2026 · source ↗
  5. ReportedPalo Alto's 10-K names Cisco among the large companies that incorporate security or observability features.
    Palo Alto Networks Form 10-K for fiscal 2026 (year ended 31 July 2026) - Item 1 business and Item 7 MD&A: platforms, customers, channels, employees, revenue by type and geography. — FY2026 · publ. 10 September 2026 · source ↗
  6. ReportedNetwork & AI Security grew 17% in fiscal 2026 and is guided to low double digits.
    Palo Alto Networks fourth-quarter fiscal 2026 earnings call transcript (Motley Fool) - platform revenue, platformized cohort retention, large deals and fiscal 2027 modelling points. — Q4 FY2026 · publ. 1 September 2026 · source ↗
Sources
Generated September 26, 2026