Palo Alto Networks Acquires Chronosphere for $3.35 Billion in Major AI Observability Play

Paying To Observe It All: Palo Alto Networks Acquisition Of Chronosphere

Cybersecurity behemoth Palo Alto Networks (PANW) recently announced the acquisition of observability vendor Chronosphere for $3.35 billion. The acquisition is a departure from PANW's security pure-play roots as it will now also sell into technology buyers. This blog explores the reasons behind the acquisition and what it means for PANW and Chronosphere customers going forward. This Is A Dual Motive Acquisition: AI And Observability This acquisition has parallel purposes. First and most topically, it provides PANW with visibility as AI systems proliferate. Security vendors can't secure AI agents if they can't see what they are doing. Chronosphere provides PANW a data visibility pipeline to feed its XSIAM solution and future AI detection engines. Chronosphere's real-time telemetry and data visibility pipelines help PANW move its security platform, Cortex, one step closer towards additional visibility. If PANW successfully integrates CyberArk's deep identity governance alongside Chronosphere's observability data, it will have built up foundational capabilities for the discovery, governance, and security of AI agents and agentic AI workflows. As the risks escalate around an expanding attack surface driven by privileged AI workloads, this unification for visibility and control will be vital for closing a significant gap in the security stack for non-human entities. Second, as PANW has moved into the SIEM market, it recognized the overlapping use cases many SIEM vendors address: security and observability. Think of vendors like Cisco Splunk, Sumo Logic, Elastic, and CrowdStrike which have solutions for both use cases. Many Forrester clients use their SIEM vendor for security and observability, thereby reducing vendor sprawl and centralizing data collection and storage. Security observability and operational observability have underpinning similarities in their data pipelines. Some enterprises, especially financial services, value the crossover. Prior to this acquisition, PANW had limited answers to the observability question, but now, it has an opportunity to extend its capabilities into the adjacent observability market. Trust Or Bust: Vendors Race To Win Cross-Domain Buyers This is more than just another headline. It's a clear signal that traditional buying pattens and personas are under pressure. IT and security leaders are being challenged with platform strategies that dominate and as vendor trust becomes a critical differentiator. A buyer's journey is often a process of confirmation, not selection. Consumers and stakeholders must: * Prepare for platform-driven reprioritization. The potential breakup of the Chronosphere-CrowdStrike partnership reopens capability gaps for CRWD customers, including high-cardinality metrics, AI-guided troubleshooting, and cost-control features that Chronosphere excelled at. Expect PANW to fold Chronosphere into its Cortex platform and prioritize security-centric features over observability innovation within 12-18 months. Bundling will pressure pricing and roadmaps. PANW's aggressive platformatization strategy will reshape contract terms and roadmap priorities. Customers should anticipate bundle-driven pricing models and a pivot toward security-first development, which may dilute Chronosphere's original focus on telemetry control and performance optimization. * Gain IT buyer trust. Security vendors are faced with cultural barriers. IT and development teams have historically resisted adopting tools from security vendors, favoring observability platforms that emphasize control rather than compliance. Chronosphere's value proposition was rooted in cost transparency and operational autonomy -- areas where PANW operates differently. Thus, expect skepticism and contract scrutiny. Customers evaluating renewals or multi-year commitments should factor in PANW's integration approach and governance model. The shift from an observability-first mindset to a security-driven platform may challenge IT buyers' trust and influence procurement decisions. Forrester clients who want to continue this discussion or dive into Forrester's wide range of AI, observability, and security research can set up a guidance session or inquiry with us.

Palo Alto Networks paying $3.3B to acquire observability startup Chronosphere, which has roots in Seattle

Cybersecurity giant Palo Alto Networks announced Wednesday it will acquire Chronosphere in a deal valued at $3.35 billion. Founded in 2019, Chronosphere sells observability software that helps engineering teams spot problems quickly and keep cloud applications running. Palo Alto Networks said the acquisition will help it meet the massive data demands created by modern AI workloads. Chronosphere CEO Martin Mao and CTO Rob Skillington first met in the Seattle area at Microsoft, where they worked on migrating Office to the cloud-based Office 365 format. They both later joined Uber's engineering teams. The company describes itself as a "distributed team" with major hubs in New York City, Seattle, and Vilnius. Mao is based in the Seattle region, along with several Chronosphere employees. The team, including Mao and Skillington, will join Palo Alto once the acquisition closes. Chronosphere has more than 250 employees. On the company's earnings call with analysts Wednesday, Palo Alto Networks CEO Nikesh Arora described Chronosphere as "one of the fastest-growing software companies in history." It counts two of the "premier LLMs" as customers. Arora said existing observability tools were not built for the AI era and that full observability has become cost prohibitive for many organizations. Chronosphere, he said, can deliver observability at one-third the cost of other leading solutions. He added that Chronosphere has "changed the observability model" with its combination of open source and architectural techniques. When Palo Alto evaluated observability and data-pipeline vendors, Arora said the team was struck by Chronosphere's engineering chops. "Generally, engineers have too much pride to tell you that somebody else is good," he said. "But our team came back and said, 'these guys are the best engineers we've run into.'" Chronosphere reports more than $160 million in annual recurring revenue, growing at triple-digit rates, according to Palo Alto. Chronosphere will remain "largely standalone" after the deal closes next year. "They are basically a bunch of really smart engineers and forward-deployed engineers, as well as a few salespeople," Arora said. "So, we're going to give them some support by introducing the right customers in very targeted fashion." The company's investors include General Atlantic; Greylock Partners; Lux Capital; Addition; Founders Fund; Spark Capital; and Glynn Capital. "When Rob Skillington and I started Chronosphere six years ago, we set out to build a next-generation observability platform capable of handling the most complex cloud native workloads," Mao wrote on LinkedIn. "Today, we are the observability leader trusted by the world's top AI and digital-native innovators." Earlier this year Palo Alto Networks also acquired Protect AI, a Seattle startup that helps companies monitor machine learning systems.

Palo Alto Networks To Acquire Chronosphere For $3.3B, Boosting AI Observability

The company is a provider of 'next-generation observability' with a platform that is 'always-on' to meet the obligations of the AI era, Palo Alto Networks CEO Nikesh Arora says. Palo Alto Networks announced Wednesday it has reached a deal to acquire observability platform provider Chronosphere for $3.35 billion, with an eye toward addressing major challenges in the category due to the growth of AI adoption. The deal is targeted at helping customers and partners to meet observability needs in the era of AI, Palo Alto Networks CEO Nikesh Arora said during the vendor's quarterly call with analysts Wednesday. [Related: Palo Alto Networks Unveils AgentiX Automation Platform: 5 Things To Know] "The 17-year-old observability industry was not designed for the AI era," Arora said. Chronosphere is a provider of "next-generation observability" with a platform that is "always-on," he said. It's the second multi-billion-dollar acquisition deal announced by Palo Alto Networks in 2025, following the cybersecurity giant's $25 billion deal to acquire identity security vendor CyberArk, announced in July. With the planned acquisition of Chronosphere -- which is expected to close during the second half of Palo Alto Networks' fiscal 2026, which ends July 31 -- Chronosphere will be combined with the vendor's AgentiX platform, which enables building and governing of AI agents. "The AI cycle is moving fast. There's never a day that goes by without significant announcements on investments in AI data centers AI infrastructure," Arora said. "This large surge towards building AI compute is causing a lot of the AI players to think about newer models for software stacks and infrastructure stacks in the future." Ultimately, "AI requires always-on, comprehensive observability at gigawatt-scale. The challenge so far has been that full observability is cost prohibitive for the customer," Arora said. "The observability solution for Chronosphere has already been deployed and has demonstrated scale at a large frontier model, where they continue to move workloads across." Founded in 2019, Chronosphere is "one of the fastest-growing software companies in history," he added. The company is generating annual recurring revenue (ARR) of more than $160 million as of the end of September, with triple-digit ARR growth year-over-year, according to Palo Alto Networks. Chronosphere will continue to be run independently following the closing of the acquisition, Arora said. "We're just going to provide the rocket fuel" for Chronosphere to continue its rapid growth, he said.

Palo Alto Networks to Buy Chronosphere for $3.35 Billion, Posts Higher 1Q Revenue -- Update

Palo Alto Networks is buying the observability platform Chronosphere for $3.35 billion, the latest acquisition by the cybersecurity company to capitalize on an AI-intensive economy. The Santa Clara, Calif.-based company said Wednesday the cash-and-stock deal will address demands for observability in the rapidly expanding artificial-intelligence data center market, combining Chronosphere's observability architecture with Palo Alto Networks' AI-powered AgentiX tool. "Once we leverage AgentiX with Chronosphere, we will take observability from simple dashboards to real-time, agentic remediation," Palo Alto Networks Chief Executive Nikesh Arora said. "We are excited to not just enter this space, but to disrupt it." The deal is expected to close in the second half of Palo Alto Networks' fiscal 2026. The deal came as Palo Alto Networks posted higher revenue in its latest quarter and raised its top-line view for the year. It had a first-quarter profit of $334 million, or 47 cents a share, compared with a profit of $351 million, or 49 cents a share, a year earlier. Adjusted earnings were 93 cents a share. Analysts polled by FactSet were expecting 89 cents, and the company had guided for adjusted earnings per share between 88 cents and 90 cents. Palo Alto Networks reported quarterly revenue of $2.47 billion, up from $2.14 billion in the prior-year period. Analysts anticipated $2.46 billion in sales. Arora said the results represented a win for the company's platformization strategy, referring to its practice of bundling its product line-up into integrated platforms rather than selling them as one-offs. He said the new Chronosphere acquisition, as well as the pending bid to buy CyberArk announced last quarter, will position Palo Alto Networks as a data and security leader in the AI era. For the full year, the company now projects revenue between $10.5 billion and $10.54 billion, up from its prior view for $10.48 billion to $10.53 billion. Palo Alto Networks projected second-quarter revenue of $2.57 billion to $2.59 billion. Analysts are expecting $2.58 billion.

Palo Alto Networks to Buy Chronosphere for $3.35 Billion

Palo Alto Networks is buying the observability platform Chronosphere for $3.35 billion. Cybersecurity company Palo Alto said the cash-and-stock deal would address demands for observability in the rapidly expanding artificial-intelligence data-center market, combining Chronosphere's observability architecture with Palo Alto's AI-powered AgentiX tool. "Chronosphere was built to scale for the data demands of the AI era from day one, which is why it is chosen by leading AI-native and born-in-the-cloud organizations," Palo Alto Networks Chief Executive Nikesh Arora said. "And once we leverage AgentiX with Chronosphere, we will take observability from simple dashboards to real-time, agentic remediation. We are excited to not just enter this space, but to disrupt it." The deal is expected to close in the second half of Palo Alto's fiscal-year 2026. Write to Elias Schisgall at [email protected]