The earlier rally followed warnings about the dangers of increasingly capable artificial intelligence from Elon Musk, Dario Amodei and Sam Altman. Those concerns helped lift cybersecurity shares as investors focused on demand for protection against AI-related threats.
Weed observed that Palo Alto’s share price had more than doubled since early 2026. He continued to view the underlying AI-driven demand for cybersecurity as sound, according to comments reported by StreetInsider.com, but questioned how much further the stock could rise in the near term.
The shares had moved above even his increased price target of $351. His caution therefore concerned the price investors were paying after the rally, while his assessment of the longer-term demand story remained positive.
A Motley Fool analysis discussing the sell-off also highlighted valuation concerns. It put Palo Alto at nearly 940 times trailing earnings and cited free cash flow of $4.1 billion, more than ten times reported net income.
Even using cash generation as the measure, the analysis calculated a price-to-free-cash-flow ratio of nearly 75. It cited optimistic analyst forecasts for annual earnings growth of no more than 17% over the next five years.
The article’s author argued that the stock was at least four times overvalued on that basis. That conclusion was the author’s valuation judgment; Weed’s reported warning focused on limited near-term upside after the shares exceeded his target.