Nikesh Arora, chief executive of Palo Alto Networks, the world's largest independent cybersecurity firm, has dramatically quickened the pace of dealmaking over the past 18 months, completing more than 40 transactions during his eight-year tenure. His central thesis is that artificial intelligence will fundamentally transform how enterprises defend their networks, requiring continuous system monitoring to counter AI-powered attacks that traditional methods simply cannot handle.
According to people familiar with the matter, Arora previously explored acquiring Datadog, a software company that helps businesses identify security threats and monitor cloud application performance, as well as Okta, which provides employee access management services for enterprise systems. After those two potential deals fell through, Palo Alto Networks agreed in February to acquire identity management firm CyberArk for $25 billion, a company that competes with Okta in certain areas, and in January closed a $3.35 billion deal for Chronosphere, a smaller rival to Datadog.
Arora's acquisition strategy is designed to broaden the company's product portfolio, persuading enterprise clients to direct more of their security budgets toward Palo Alto Networks rather than competitors including Fortinet, Zscaler, Microsoft and Cisco. According to people close to the company, Arora has recently shown interest in acquiring products that could complement Chronosphere's offerings, specifically tools that help businesses reduce costs associated with log data and database analytics. Potential targets include Cribl, a startup valued at $3.5 billion, and ClickHouse, which was valued at $15 billion following a funding round in January.
Beyond data management, Arora is also exploring potential transactions in AI security, focusing on products that defend enterprises against cyberattacks targeting employee use of AI tools. In May, Palo Alto Networks acquired Portkey for several hundred million dollars, a routing gateway product that helps businesses deploy models from multiple AI vendors while monitoring usage and expenditure. A Palo Alto Networks spokesperson declined to comment on market speculation. Spokespeople for Datadog and Okta also declined to comment.
Arora's "platformization" strategy, which encourages more enterprise clients to purchase the entire product suite, continues to gain momentum. Palo Alto Networks shares have climbed 90% this year, pushing the company's market value to nearly $280 billion, as AI's ability to identify software vulnerabilities drives increased corporate security spending. Arora has told shareholders that revenue from AI-related products is growing rapidly, though the company has not yet disclosed those sales figures separately. The company is scheduled to report earnings for the July quarter next week.
Shares of peers CrowdStrike and Fortinet have also performed strongly this year. CrowdStrike is pursuing acquisitions of similar targets to Palo Alto Networks, albeit at relatively smaller deal sizes. Microsoft, meanwhile, is undertaking a comprehensive overhaul of its security business, positioning AI-powered security tools as the core selling point of its traditional product suite.
Rama Sekhar, a partner at Menlo Ventures, said the consolidation wave is real, particularly as companies rethink what security solutions should look like in the AI era. He expects at least three to four more major acquisitions in the AI security space.
Arora joined Palo Alto Networks in 2018 after serving as Google's chief business officer and spending two years as president of SoftBank Group. Before initiating the large-scale acquisition spree last year, he had focused on small deals under $1 billion at Palo Alto Networks. In late 2024, Arora turned his attention to identity security, a segment of cybersecurity that manages employee logins to ensure both workers and the AI tools they use only access authorized data.
Facing numerous competitors including Microsoft, Okta and CyberArk, Arora concluded that a large-scale transaction was necessary to establish a meaningful presence in that space. Between late 2024 and early 2025, he held a series of meetings with Okta CEO Todd McKinnon, during which the two discussed product synergies, though the talks ultimately stalled over valuation differences. Palo Alto Networks subsequently agreed to acquire CyberArk for $25 billion in July. In spring 2025, Arora approached Datadog CEO Olivier Pomel about a potential acquisition, but Pomel did not respond positively and negotiations never progressed to a formal offer. Datadog's market value has since doubled to more than $80 billion.
Palo Alto Networks has stated that Chronosphere and CyberArk contributed $338 million to the company's $3 billion in revenue during the April quarter. Enterprises are increasing their cybersecurity budgets to address new threats posed by AI, with Anthropic and OpenAI both selling AI security products designed to discover and patch vulnerabilities. Palo Alto Networks uses models from Anthropic and OpenAI for research and development, as well as to power certain customer products, while simultaneously accelerating the launch of its own proprietary offerings.
According to people familiar with the matter, the company recently developed a product that combines AI with Chronosphere's data observability capabilities, enabling it to scan enterprise IT systems within minutes and detect potential AI threats. More than 600 customers, including FedEx, Home Depot and DHL, are already using the product.
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