Palo Alto Networks Lifts FY26 Outlook as AI Driven Cybersecurity Demand Accelerates

Market Performance

South African Market Summary

South African equities advanced strongly, with the JSE All Share index gaining 1.76% to close at 114,006.15 points and the Top 40 rising 2.00% to 106,257.27 points. National Treasury reiterated that South Africa remains on track to meet its fiscal targets despite Middle East-related pressure, citing stronger-than-expected fiscal outcomes, a third consecutive primary surplus and fiscally neutral relief measures. Treasury also pointed to improving debt dynamics, with debt expected to decline to 76.5% of GDP by 2028/29, and reduced risks from state-owned enterprises as Eskom’s performance improves. Separately, Telkom raised its dividend payout ratio after stronger cash flow and earnings, declaring a final dividend of 270 cents per share.

European Market Summary

European equities advanced on Tuesday, with the pan-European STOXX 600 rising 0.7% to 625.34 points, supported by strength in technology shares after a robust outlook from STMicroelectronics. The technology sub-index gained 3.4%, making it the best-performing sector. Investors also assessed fresh eurozone inflation data, which showed consumer prices accelerating to 3.2% in May from 3.0% in April, driven by higher energy and services costs amid Middle East-related pressures. The print reinforced expectations of a 25-basis-point rate increase from the European Central Bank next week. In the UK, Bank of England Governor Andrew Bailey reiterated the importance of restoring inflation to target, while Germany’s labour agency warned of a sharply wider deficit.

US Market Summary

US equities closed modestly higher on Tuesday as continued enthusiasm around artificial intelligence offset geopolitical uncertainty linked to US-Iran talks over reopening the Strait of Hormuz and ending the months-long conflict. The S&P 500 and Dow Jones finished in positive territory, supported by gains across most major sectors, while the Nasdaq edged higher and the small-cap Russell 2000 outperformed large-cap peers. Labour market data showed an unexpected increase in job openings, led by professional and business services, although hiring, layoffs and quits all declined, pointing to softer labour-market churn. Investors now turn to Friday’s May employment report, expected to show 85,000 jobs added and unemployment unchanged at 4.3%. Hewlett Packard Enterprise surged 19.5% after accelerating long-term targets.

Asian Market Summary

Asia-Pacific markets opened broadly higher on Wednesday, with Japan’s Nikkei 225 reaching a record high as investors looked through uncertainty surrounding US-Iran negotiations aimed at ending the Middle East conflict. In China, services activity strengthened, with the RatingDog China General Services PMI rising to 54.4 in May from 52.6 in April, marking the fastest expansion in three months as new business growth improved and overseas demand recovered. However, rising input costs continued to pressure firms. In Australia, first-quarter GDP growth slowed to 0.3% from 0.9%, below expectations of 0.5%, as strong domestic demand was offset by import growth linked to data-centre investment. Annual growth remained at 2.5%, keeping inflation risks in focus for the RBA.

Currency Market Summary

The South African rand strengthened in early trade on Tuesday, supported by firmer gold prices as investors awaited greater clarity on US-Iran peace talks amid conflicting reports. Currency markets remained sensitive to Middle East developments, with renewed hostilities in the Gulf reinforcing safe-haven demand for the US dollar. The yen weakened towards the key 160 level against the dollar as persistent greenback strength and geopolitical risk weighed on sentiment. The US Central Command said Iranian ballistic missiles aimed at regional neighbours failed to hit targets, while US forces responded with strikes on Qeshm Island. Sterling traded broadly flat, remaining in the middle of its recent range, with investors viewing any credible peace deal as supportive for the pound.

Commodity Market Summary

Gold prices softened on Wednesday as renewed Middle East hostilities pushed crude oil prices higher, reinforcing concerns that inflationary pressure could keep interest rates elevated for longer. Oil gained more than 1% in early trade after Iran reportedly fired missiles towards Kuwait and Bahrain, while the US military said American forces had carried out retaliatory strikes on Iran’s Qeshm Island. Markets remained focused on the trajectory of the Iran war, with Tehran reviewing a proposed US agreement to halt the conflict, although diplomatic progress appeared limited. Supply-side dynamics also supported crude prices, with US oil inventories reportedly falling for a seventh consecutive week, according to market sources citing American Petroleum Institute data.

Domestic Company News

Telkom SA SOC Limited (TKG) +1.62%

Telkom delivered another year of solid earnings growth for the year ended 31 March 2026, supported by stronger data-led revenue, disciplined cost control and improved cash generation. Group revenue rose 1.4% to R44.48 billion, driven by growth in Consumer and Openserve, partly offset by weaker BCX performance. Data revenue increased 7.6% to R26.60 billion, now representing 59.8% of group revenue, with mobile data up 10.5% and fibre-related data rising 6.3%. EBITDA increased 5.8% to R12.48 billion, lifting the margin to 28.1%, while HEPS rose 21.5% to 708.5 cents. Free cash flow improved 10.4% to R3.07 billion, supporting a 65.7% higher ordinary dividend of 270 cents per share.

Burstone Group Limited (BTN) -0.51%

Burstone reported a resilient performance for the year ended 31 March 2026, with distributable income per share rising 2.2% to 104.71 cents and the full-year dividend increasing 2.2% to 94.24 cents, based on a maintained 90% payout ratio. Underlying real estate performance remained stable, supported by a diversified investment base, while South Africa delivered like-for-like NOI growth of 4.2%, vacancy improvement to 2.7% and a c.5% portfolio revaluation. The Group secured R4.4 billion in new third-party equity commitments, creating capacity for R10 billion–R12 billion in real estate opportunities. Fee income rose 48.9% to R131 million, while overheads declined 17.3%. LTV increased to 39.6%, with NAV broadly stable at R11.79 per share.

Invicta Holdings Limited (IVT) -0.03%

Invicta issued a trading statement for the year ended 31 March 2026, guiding earnings per share of between 550 cents and 564 cents, representing a 27% to 29% decrease from 773 cents in the prior corresponding period. The decline primarily reflects the absence of a significant non-recurring R199 million profit from the disposal of Kian Ann Engineering’s main warehouse in Singapore, which added 206 cents to prior-year EPS. Headline earnings per share are expected to be between 535 cents and 545 cents, broadly flat to 2% higher year on year. The Spaldings acquisition traded in line with budget but reduced HEPS by 33 cents due to acquisition costs, amortisation and a headline loss.

Global Company News

Palo Alto Networks Inc. (PANW) -1.10%

Palo Alto Networks raised its fiscal 2026 revenue and profit forecasts, supported by stronger enterprise demand for cloud, identity and AI-driven cybersecurity solutions amid an increasingly complex threat environment. The company now expects annual revenue of US$11.415 billion to US$11.425 billion, ahead of its previous guidance range of US$11.28 billion to US$11.31 billion. Adjusted earnings per share are forecast at US$3.77 to US$3.79, up from US$3.65 to US$3.70 previously. Third-quarter revenue increased 31% to US$3.0 billion, exceeding expectations of US$2.94 billion. AI remains a key growth driver, with rising AI-related cyber threats expected to support further cybersecurity spending. Shares rose 7.4% in extended trading following the update.

Dollar General Corporation (DG) -3.33%

Dollar General raised its fiscal 2026 earnings outlook but maintained its annual sales forecast, reflecting continued pressure on its core low- to middle-income customer base from higher gasoline prices and broader cost-of-living pressures. The group now expects earnings per share of US$7.20 to US$7.45, up from US$7.10 to US$7.35 previously, supported by cost-control initiatives, supply-chain productivity, store simplification and tighter inventory management. Same-store sales growth guidance was held at 2.2% to 2.7%. First-quarter net sales rose 3.4% to US$10.79 billion, while net profit increased 12.4% to US$2.00 per share, ahead of expectations. Management noted additional pressure from reduced SNAP support, particularly in rural communities.

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