Palo Alto Networks CEO seeks 90% cut in AI token costs

On July 9, Palo Alto Networks CEO Nikesh Arora made a public case on CNBC for a dramatic reduction in AI token pricing. According to Arora, current token prices are a material barrier to enterprise adoption of AI, and he would like to see prices fall as much as 90%.

Palo Alto Networks' interest in lower token costs stems directly from its business model. The company provides cybersecurity solutions designed to protect AI infrastructure, platforms, and models, helping enterprises build, deploy, and manage AI systems safely while defending against AI-driven cyberattacks. When enterprises adopt AI widely, they purchase more of Palo Alto Networks' security services. Conversely, when token costs remain high, fewer businesses adopt AI, limiting the company's growth opportunity.

This strategic alignment has already borne fruit. In fiscal Q3 2026 (ended April 30), Palo Alto Networks reported that surging cybersecurity demand fueled by AI adoption drove strong results: revenue rose 31% to $3 billion（約4800億円）, and backlog increased 36% to $18.4 billion（約2.9兆円）. The pattern suggests that each wave of enterprise AI investment drives corresponding security spending.

Wall Street has taken note. On July 6, Needham raised its price target on Palo Alto Networks shares to $425 from $350 and maintained a Buy rating, pointing to the company's improving performance. Analysts broadly project more than 96% upside potential from current levels, and approximately 87 hedge funds are backing the stock. Year-to-date, Palo Alto Networks shares are up almost 90%.

Palo Alto Networks occupies a strategic position in the enterprise AI supply chain: it does not build AI models or provide tokens itself, but rather secures the infrastructure and platforms that run AI systems. CEO Nikesh Arora's public call for a 90% drop in token pricing reflects this indirect stake in the AI market. By lowering the cost barrier to AI adoption, enterprises would invest more broadly in AI tools, which in turn would drive demand for the cybersecurity and risk-management solutions that Palo Alto Networks sells.

The company's recent financial performance underscores this dynamic. In fiscal Q3 2026, revenue growth of 31% and backlog growth of 36% were both explicitly attributed to "surging cybersecurity demand fueled by AI adoption." This suggests that enterprises are already spending on AI security as they adopt AI, and lower token costs could unlock a much larger wave of AI spending. Analyst sentiment has shifted favorably: on July 6, Needham raised its price target to $425 from $350, citing improving performance, and the broader Street sees more than 96% upside potential from the current price.

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