Palo Alto Networks to Acquire Chronosphere in $3.35 Billion Push Into AI-Era Observability

Palo Alto Networks has announced it will acquire cloud-native observability provider Chronosphere in a deal valued at approximately $3.35 billion in cash and replacement equity awards, marking one of the cybersecurity company’s most significant moves into the fast-growing AI infrastructure space.

In a statement, Palo Alto Networks positioned the acquisition as a response to surging enterprise demand for resilient, always-on digital operations. The company said Chronosphere’s architecture was purpose-built for the scale and speed of modern cloud and AI applications, giving it the ability to handle massive telemetry streams while maintaining performance and cost efficiency.

Chief executive Nikesh Arora said the combination of Chronosphere’s observability platform with Palo Alto’s security and data-processing technologies will move the industry beyond passive monitoring. He argued that enterprises running large-scale AI workloads increasingly require real-time visibility and automated remediation to avoid operational disruption, describing constant uptime as “the foundational requirement for every modern AI data center.” Arora said integrating Chronosphere with Palo Alto’s internal AgentiX platform will help shift observability from dashboards to active response.

Chronosphere CEO Martin Mao said joining Palo Alto will accelerate the company’s mission to support “the world’s largest digital organisations,” calling the cybersecurity giant the right partner to scale its technology globally. Chronosphere has been experiencing rapid expansion, reporting annual recurring revenue above $160 million as of September 2025 and maintaining triple-digit year-over-year growth.

The acquisition also signals Palo Alto’s intent to more closely link observability and cybersecurity at a time when enterprises face growing operational complexity. By merging telemetry ingestion, security analytics and AI-driven automation, the company aims to offer a unified view of infrastructure health and security posture across cloud-native and AI-native environments.

The deal is expected to close in the second half of Palo Alto’s fiscal 2026, subject to regulatory approvals and customary closing conditions.

If completed, the Chronosphere acquisition marks a strategic expansion of Palo Alto’s portfolio into the core data pipelines that power AI systems—an area increasingly seen as essential to both operational resilience and security in the next phase of enterprise computing.