Palo Alto’s new Google Cloud deal boosts AI integration • The Register

Safety vendor Palo Alto Networks is increasing its Google Cloud partnership, saying it can transfer “key inside workloads” onto the Chocolate Manufacturing facility’s infrastructure. The outfit additionally claims it’s tightening integrations between its safety instruments and Google Cloud to ship what it calls a “unified” safety expertise. On the similar time, Palo Alto might trim its personal cloud buy commitments.

With Palo Alto dedicated to spending at the least $6.3 billion over the subsequent few years on cloud companies alone by means of 2031, in line with SEC filings, the deal seems to be a large win for Google over rivals AWS and Microsoft Azure.

In a press release on Friday, Palo Alto Networks stated it was increasing its dedication to run its safety platforms on Google Cloud’s “safe, trusted AI infrastructure by migrating key inside workloads to Google Cloud in a brand new multibillion-dollar settlement.”

In August, Palo Alto’s Chief Monetary Officer Dipak Golechha stated that the corporate was negotiating “favorable procurement arrangements as the dimensions of our cloud host merchandise continues to develop,” in the course of the fiscal 12 months finish earnings name.

On the time, Palo Alto stated that it deliberate to spend $145 million in cloud buy commitments in fiscal 12 months 2026, and $774 million in cloud buy commitments in fiscal 12 months 2027.

Three months later, Palo Alto said it expects to spend simply $660 million on cloud buy commitments in 2027, a $114 million drop from its prior estimate. It additionally stated it can spend $60 million within the the rest of fiscal 2026 (which fits by means of July 31), however didn’t point out how a lot it had already spent in its first quarter. Estimates for 2028, 2029, and 2030 remained much like the sooner report.

Palo Alto’s cloud buy commitments are ramping shortly, in line with its monetary information. In 2028, it expects to spend $998 million, then $1.01 billion in 2029, $1.14 billion in 2030, and it has budgeted about $2.5 billion for 2031 and past. We do not know what share of those bills go on to Google Cloud, however this announcement leads us to consider it could be a major share.

We reached out to Palo Alto Networks’ Investor Relations to ask if the change in 2027 mounted prices got here from doubtlessly getting a greater take care of Google or another motive. Neither Google nor Palo Alto Networks responded to requests from The Register for remark.

“We proceed to be happy by the continued progress of our SaaS choices and stay actively engaged in executing cloud price efficiencies,” Golechha stated throughout a November earnings call.

Friday’s announcement contained no new merchandise, however promised clients “deeper integrations” with Google, and Palo Alto stated its hope is that their partnership would “speed up Google Cloud adoption.”

In its launch, Palo Alto Networks highlighted three key integrations that its clients would have the ability to make the most of:

• Palo Alto’s Prisma AIRS safety platform will defend Google Cloud AI workloads, together with these with Vertex AI and Agent Engine. It should even do AI Crimson Teaming and AI Mannequin Safety to search for vulnerabilities in your fashions.
• VM-Collection firewalls from Palo Alto will now have “deep integrations” with Google Cloud, so clients can do packet inspection and menace prevention.
• Prisma Entry, inside its Prisma SASE platform, helps clients join WAN infrastructure throughout a number of clouds and enhance “the consumer expertise” when accessing AI functions operating on Google Cloud.

The corporate additionally stated that its work with Google gives a unified expertise with instruments that work higher collectively.

Palo Alto Networks additionally stated it plans to energy its copilots utilizing Google Cloud’s Vertex AI platform and Gemini LLM.

Based on a LinkedIn post by firm president BJ Jenkins, the deal can even give Palo Alto accelerated market attain with a Google-led go-to-market technique for key merchandise like Palo Alto’s Prisma AIRS.

“We’re eradicating the friction between safety and growth, offering a unified platform the place essentially the most superior safety is just a local a part of constructing what’s subsequent. Along with Google, we’re embedding our AI-powered safety deep into the Google Cloud material, turning the platform itself right into a proactive protection system,” Jenkins stated in a press release.

In the meantime, cloud internet hosting service prices, which embody each mounted and variable bills, elevated $48 million for the quarter that ended on October 31 versus the identical quarter within the prior 12 months, in line with the November 10-Q type.

The corporate’s gross margin for the quarter was up one-tenth of a share level. ®