Microsoft (MSFT) updated plans to expand further into cybersecurity this week, creating chaos in pure-play vendors like Club name Palo Alto Networks (PANW). While dropping 7% on Wednesday after the Microsoft announcement, PANW shares clawed back roughly half those losses and edged higher Friday. We think that decline was an overreaction and the bounce since shows that investors have come to realize that Microsoft’s moves pose little threat to cybersecurity leader Palo Alto. “I’m not worried one bit about what Microsoft is doing,” Jim Cramer said during the Club’s monthly meeting Wednesday. Microsoft, late Tuesday, announced two new products focusing on securing cloud access and protecting identities. Both Entra Internet Access and Entra Private Access are in preview. The offerings signal Microsoft’s first steps into the saturated Secure Access Service Edge (SASE) market, a large part of the cybersecurity dominated by smaller firms like Palo Alto. PANW YTD mountain Palo Alto Networks YTD performance In an interview on “Mad Money” on Thursday evening, Palo Alto Networks CEO Nikesh Arora told Jim Cramer, “From what I read, [Microsoft is] sort of heading off into a good start, but they have a long way to go.” Arora said the SASE space is going to be “very huge” and Microsoft’s interest is a “huge validation for the market.” However, he stressed, “We’ve sowed the seeds and invested in this five years ago.” In a note to clients, Jefferies analyst Brent Thill said the Microsoft move could have “potential longer-term ramifications to vendors,” like Palo Alto, along with other cybersecurity players such as Cloudfare and Zscaler , which saw less severe Wednesday declines and more robust bounces. Microsoft was looking to make Friday four straight sessions of gains. By contrast, Goldman Sachs analyst Gabriela Borges told clients Wednesday that cybersecurity players can weather the Microsoft storm. “Many enterprises and small businesses rely on Microsoft to provide a…
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