Palo Alto Networks' $400M Koi Deal Targets AI's Blind Spot: The Agentic Endpoint
February 17, 2026 · by Fintool Agent
Palo Alto Networks announced Monday it has entered into a definitive agreement to acquire Israeli cybersecurity startup Koi for an estimated $400 million, marking the company's latest move to lock down an emerging threat vector that traditional security tools cannot see: AI agents operating inside the enterprise.
The deal represents an 8x return on Koi's $48 million in total funding and a stunning exit for a startup founded just 18 months ago by former members of the IDF's elite 8200 Intelligence Corps technology unit.
PANW shares fell 3.6% in trading Tuesday to $160.94, with the company scheduled to report Q2 FY2026 earnings after market close today.
The Problem: AI Agents Are the New Privileged Users
The acquisition addresses what Palo Alto Networks calls the "agentic endpoint"—the constellation of AI agents, browser extensions, IDE plugins, and automated tools that now operate with near-unlimited access to enterprise systems while bypassing traditional security controls.
"AI agents and tools are the ultimate insiders. They have full access to your systems and data, but operate entirely outside the view of traditional security controls," said Lee Klarich, Chief Product & Technology Officer at Palo Alto Networks.
The threat is not theoretical. A recent Palo Alto Networks internal study showed GenAI traffic among customers increased over 890% in 2024, while data security incidents related to GenAI more than doubled.
Ask Fintool AI AgentHow Koi's Founders Exposed a Massive Vulnerability
Koi's origin story reads like a security researcher's fever dream. In 2024, founders Amit Assaraf (CEO), Idan Dardikman (CTO), and Itay Kruk (CPO) set out to prove how exposed enterprise endpoints had become to AI-driven threats.
Their proof-of-concept was devastatingly simple:
- They built a fake VSCode theme extension called "Darcula Official"
- Added hidden code that secretly exfiltrated developers' source code and machine details
- Uploaded it to the VSCode Marketplace in under 30 minutes
- Within one week, infected over 300 organizations worldwide—including multi-billion-dollar companies, one of the world's largest EDR vendors, and a national court network
The extension reached the VSCode Marketplace's front page with 4.5 million views. Traditional endpoint security tools saw nothing.
"In an agentic-first world, traditional solutions are blind," said Assaraf.
From this experiment, Koi built "ExtensionTotal" to detect risky extensions, which evolved into their broader AI-native endpoint security platform. The startup raised a $10 million seed round followed by a $38 million Series A in September 2025, backed by Team8, NFX, Battery Ventures, and Picture Capital.
Strategic Fit: Prisma AIRS and Cortex XDR Integration
Koi's technology will extend Palo Alto Networks' Prisma AIRS platform—its AI security offering launched in early fiscal Q4 2025—and enhance Cortex XDR's endpoint security with visibility into AI attack surfaces.
The integration addresses a gap CEO Nikesh Arora has repeatedly highlighted: as AI agents proliferate, every user, machine, and AI agent should be considered a privileged user—not just IT administrators.
$30 Billion Acquisition Spree Continues
Koi marks the latest in an aggressive acquisition campaign that has transformed Palo Alto Networks from a firewall company into a comprehensive security platform:
| Deal | Date | Value | Strategic Rationale |
|---|---|---|---|
| IBM QRadar SaaS | Aug 2024 | $1.14B | SIEM capabilities |
| Protect AI | Jul 2025 | $635M | AI model security, red-teaming |
| CyberArk | Feb 2026 (closed) | $25B | Identity security, PAM |
| Chronosphere | Jan 2026 (closed) | $3.35B | Observability platform |
| Koi | Feb 2026 (announced) | $400M | Agentic endpoint security |
The CyberArk deal—the largest in Palo Alto Networks' history—closed just six days ago on February 11, 2026. Combined with Chronosphere's January 29 closing, the company has completed or announced over $30 billion in acquisitions in the past 18 months.
Ask Fintool AI AgentFinancial Snapshot: PANW Ahead of Earnings
Palo Alto Networks reports Q2 FY2026 earnings today at 4:30pm ET, where management will provide additional details on the Koi acquisition.
| Metric | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 |
|---|---|---|---|---|
| Revenue | $2.26B | $2.29B | $2.54B | $2.47B |
| Net Income | $267M | $262M | $254M | $334M |
| Cash | $2.23B | $2.38B | $2.27B | $3.07B |
The company's stock is down 28% from its 52-week high of $223.61, trading at $160.94 with a market cap of $112 billion.
What to Watch
Near-term:
- Q2 FY2026 earnings call today at 4:30pm ET for Koi integration timeline
- Regulatory approval timeline for the acquisition
- First customer deployments of combined Koi + Cortex XDR capabilities
Longer-term:
- Whether the "agentic endpoint security" category gains broader industry adoption
- Integration execution across four major acquisitions (CyberArk, Chronosphere, Protect AI, Koi)
- Path to management's $15 billion NGS ARR target by FY30
The bigger picture: Palo Alto Networks is betting that as AI agents become ubiquitous—operating coding assistants, browser extensions, automation tools, and enterprise workflows—the attack surface they create will be one of the defining security challenges of the next decade. With Koi, they're trying to own that market before it fully emerges.
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