Palo Alto Networks CEO Nikesh Arora Talks Latest Acquisition
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Bloomberg Audio Studios. Podcasts, radio, news. So networks manages to fight the narrative of a downward draft in the markets. We're up a quarter percent. And look, we're seeing the cybersecurity leader announce its intent to acquire Protect AI. It's expanding the company's capabilities in security, basically combating new threat

I mean, an explosion in artificial intelligence. All of this as we get this year's RSA conference underway. Joining us now, Nikesh Arora, Parallel Alto Network CEO. You've got a lot to announce, new security platform, but let's just go to the new announcement in terms of M&A. Are you going to give us an amount that you paid? I was hearing about up to $650 million. Yes.

We're not going to talk about what we paid, Caroline. Nice to see you. Look, we're again at a technology inflection point. We're all talking about AI. You had people talking about AI earlier. And every time you have a technology inflection point, it becomes very important that we are able to come forth and provide solutions to our customers so they can securely deploy technology. And in that context,

We're very assertively and aggressively working on both a build and buy strategy to build perhaps what will be the most important thing over the next few years, which is a platform that allows you to deploy AI securely. Okay, so let's talk about build versus buy. And why was this asset, Protect AI, so necessary to go inorganic at this moment?

If you look at what's going on in AI, you were on before people talk about LLMs, people talking about deploying AI-based applications, people trying to figure out how to deploy infrastructure, whether it's on-prem or in the public cloud, which chipset to use, which model to use. All these are very important technological decisions which are going to underpin the platforms of the future.

When you put them together and you deploy them, you have to make sure that you're looking at the security aspect of every one of these things. Protect.ai, after an extensive look around the market, we found was working on some very interesting topics, which are complementary to what we've been building. We've been building a great runtime platform to protect our customers as they deploy AI. Protect.ai was working on something similar, where they were looking at all the models in the world, scanning them to make sure there wasn't bad stuff lurking in them.

So the combination of the two, which we will integrate into one platform, actually allows us to be more comprehensive and we will offer our customers. I just want to get your bird's eye perspective here, Nikesh, because no one can push us forward as much as you can in many ways to the future of agentic AI. And the fact that where are we to ultimately be protecting ourselves? There's demand for traditional, basically firewall endpoint products of security. How does that shift if you're going from a user level to an agent level in this moment?

Well, I think that's going to be the buzzword for RSA, Caroline. People are going to talk a lot about how do you make agents work. I think it's still unclear. There's a lot of innovation being put out in the market, whether it's the A2A model, there's an MCP model. There's all wonderful buzzwords we create in our industry.

As agentic, I've said before, to me, agentic AI becomes real when you start giving AI arms and legs, whether robotic arms and robotic legs or real arms and legs in terms of replacing human beings. I think that's where the question becomes, can I rely on AI to accomplish the task without supervision?

And that's where things will get very interesting and very hairy in certain cases. There, it becomes important not only to make sure that the agent you're giving autonomy to is something that you're very comfortable will act within the guardrails that you put out there for that agent. And then you got to make sure nobody can take over your agent and hijack it in a way that can make them do things you don't want them to do. So I think that's going to be the next frontier of cybersecurity.

as we get AI deployed in multiple places, how do we give autonomous control to these agents? How do we give them agency effectively? And I can't wait for that world to happen, but it's going to be a whole new set of opportunities that will open up for us. There are a lot of names trying to make the most of this opportunity. A lot of them are the hyperscalers. A lot of them in many ways become your competitors as they add their own security offerings. Where do you sit in this whole frenemy environment?

Well, you know what's been fascinating, Caroline? Logically, the cloud provider should have been our competitors in cloud security. They should have been our competitors in endpoint security, but they're not. They're focused on making sure technology gets deployed as quickly as possible, which is good perhaps for their business, for all of their customers. Our job is to make sure that we stay in lockstep with them and work with our customers to make sure they can deploy technology in a secure fashion. Let's be fair.

If our customers have comfort that when they deploy AI, when they give autonomous control to AI to do repetitive tasks or interesting tasks, it can be done securely. The moment we can provide the underpinning of trust, the underpinning of reliability, the fact that if you deploy with Palo Alto

networks, there is a very high probability that it's going to be much safer than anything else. I think that's where the winning combination happens. So I don't see this as sort of a competitor environment for now with the hyperscalers. I see it as an opportunity for us to work together and make sure we accelerate the adoption of this technology as opposed to have our customers be confused which way to go. I mean, you used to work at Google. You host your products on Google Cloud. How do you feel about their big splashy deal for Wizz?

It'll be interesting to watch. I have lots of conversations with people at Google about it. We don't intend to change how we deploy our products. We buy infrastructure from them and sometimes we see them in the market. Our hope is that our customers will understand that you want an unbiased product that can operate effectively on every cloud provider as opposed to something that is beholden to a particular cloud provider. We still need to solve

for everybody else out there. So I think that's our sort of ethos. We want to be independent. We want to be somebody that can deliver the same level and capability of security across every platform there is out there so our customers don't have to spend time trying to integrate all this stuff together, which is our entire philosophy around platformization.

I love following what you're doing in terms of platform offerings, products, what you're doing in terms of, well, the latest M&A, but I also love following you on social. And perhaps whether you wanted to or not, you were involved in the AI debate about whether we were going to get as much CapEx spend, whether infrastructure is reality versus hype. Where do you stand on it right now, Nikesh?

I think if you look around you, everybody is getting ready for a very large adoption of AI scenario because you see tens of billions of dollars being committed by people in terms of building infrastructure. I think that's right. I think we may get the timing right.

not perfect. You know, you may build too much before it's all consumed. But I think it's headed in the right direction. I think short term in this 12 to 24 month time frame, you could see that a lot of the investment that's going is going towards innovation. I say make a smarter model, make robotics work. So you need a lot of

you need a lot of compute to get to a place where these models become extremely useful. Once you get to a point where these models are extremely useful, the question becomes, how do I deploy them in my business? How do I, as a regular company, regular customer, deploy these things effectively, securely? I think that could take a little longer than people think because everybody's experimenting and we're not all experts yet. This is something that came about

less than 24 months ago, so we all have to get our muscle, understand how this affects our business. How do I build robotic things that can do stuff for me around my enterprise? How do I build AI agents that can do stuff for me around my enterprise? Do I build or do I buy from somebody? So all that stuff will take a little longer to pan out, but when it happens, we're going to need all that capacity that's being built. And unfortunately, you can't wait to build capacity. You have to build it ahead of demand. So I think it's the right direction. Timing's still to be figured out.

Well, thanks for sharing your expertise across all the subjects and the deal news. Mikesh Arora, go enjoy RSA. We thank you, Palo Alto Network's CEO.

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