Aaaaaaand it’s gone. The market’s longest rally of the year officially ended yesterday as all three major indices closed in the red: Nasdaq -0.3%, S&P 500 -0.2%, and Dow -0.1%. 

The reason for the breather comes at the hands of investors bracing for daddy Powell's remarks at Jackson Hole later this week. Why? Well because US job growth is likely to be far less, on pace than estimated. Shocker… 

(Source: Giphy) 

Meaning, fears over the Federal Reserve slacking off and not cutting rates when they needed to is the main concern going into Powell's remarks in Jackson on Friday - as Wall Street's finest minds (read: overpaid guessers) Goldman Sachs and Wells Fargo economists expect payrolls to be off about 50,000 a month (lower than anticipated).

(Source: Investing.com) 

Now of course, we’ll see what the Fed gives us later this week, but looking at the full picture of the market, this is likely nothing more than a healthy pullback before more continuation ahead. Of course, don’t hold your breath, but don’t freak the F’out either. 

Especially considering that Palo Alto Networks gave the markets a juicy, thicc, and robust earnings showing yesterday - igniting even more momentum for Big Tech going forward.

(Source: Giphy) 

In short, Palo Alto Networks catapulted to a peak of +7.78% yesterday as it continued its earnings season winning streak (four straight), of easily beating top and bottom line estimates.

For instance, while analysts came in expecting EPS of $1.41, Palo Alto handed them back a cool $1.51 for a nice +6.96% surprise. Wall Street’s revenue estimates of $2.16 billion were also body bagged as Palo Alto reported $2.19 billion for a +1.21% beat (indicating a +15.34% revenue increase year over year). 

(Source: IBD) 

So clearly investors were giving cheers all around after Palo put on a clinic, but I’d argue that Crowdstrikes (Palo Alto’s rival) epic fail in July definitely had something to do with the jump in earnings results as clients are now thinking: Imagine not having Palo Alto as our cybersecurity firm going forward. 

Especially considering the trailing 12 month results for Palo Alto was even more impressive than the actual earnings. For example, while revenue shot up a cool +15.34% year-over-year, Palo Alto’s net income and diluted EPS both catapulted 158.63% and 154.84%, while net profit margin and operating income followed suit with +124.44% and +129.22% increases. 

(Source: Investopedia) 

Impressive right? Yeah I thought so too, and so did everyone else on Wall Street as 9 individual analysts from Oppenheimer, Stifel Nicolaus, and Deutsche Bank among others all raised their price targets on the stock yesterday. 

For instance, Deutsche Bank and Cantor Fitzgerald hit the market with the most aggression as they both raised their price targets on Palo Alto by $65 and $50 respectively - indicating a nice +15.04% and +16.5% upside for the stock. 

(Source: The Fly) 

Now of course, the earnings results aren't the only reason for the upgrades.  Simply put, the aura of Palo's numbers is now giving investors a clear indication that the company's hotly debated new strategy is actually paying off. The strategy? Platformization - which basically means better marketing in terms of getting more of its customers to adopt more of its offerings.

(Source: Market Watch) 

However, while some investors have worried that this new strategy would be giving away some free or discounted products to pursue long-term ambitions - the marketing is clever. Once a customer sees how much of an impact Palo Alto’s products have in their ecosystem, they can’t move forward without it. See: Similar to trying it before you buy it. 

And now as we can all see, customers are getting hooked faster than a “trust fund” baby at their first Burning Man as Palo Alto’s forecasts for the fiscal year expects up to $9.15 billion in revenue and $6.31 in adjusted earnings per share - which is better than the consensus forecast of $9.11 billion and $6.22 EPS. 

(Source: Benzinga) 

So obviously, Palo Alto is on cloud 9 after these new revisions and earning beats, which is why the company is now betting even more on itself as it also boosted its buyback program by $500 million. Meaning, bullish sentiment is hovering around this big tech stock like my mom when I got my first cell phone in middle school. It definitely ain’t leaving anytime soon… 

(Source: Giphy) 

Plus, given that Palo Alto is on an absolute tear this year up 27.37% YTD, and up +9.60% over the past five days, the bandwagon is chugging full steam ahead. 

So with all of that said, even though the market took a breather yesterday, the momentum hasn’t shifted gears. With Big Tech regaining its footing as Nvidia continues to recorrect, while Apple does Apple, Palo Alto’s impressive showing just adds more flame to the fire throughout the week. 

(Source: Giphy) 

In the end, keep an eye on Palo Alto. Just like Cisco, they’ve been brushed under the rug recently, but now the company is roaring like a friggin lion in the face of literally everyone else. And Wall Street, and me for that matter, are definitely here for it. 

In the meantime, stay safe and stay frosty this Wednesday friends! Until next time… 

Stocks.News holds positions in Apple as mentioned in the article.