Palo Alto Networks has agreed to acquire Chronosphere for $3.35bn, with the aim of expanding its data and security offerings for organisations handling AI workloads.

The deal terms include payment in cash and replacement equity awards, subject to adjustments.

Chronosphere is an observability platform that supports large-scale cloud data management and is used by businesses operating major large language models (LLMs).

The company reported annual recurring revenue exceeding $160m as of the end of September 2025.

Chronosphere co-founder and CEO Martin Mao said: “We founded Chronosphere to provide scalable resiliency for the world’s largest digital organisations. Palo Alto Networks is the perfect strategic partner for our customers, partners, and employees.

“It allows us to combine our disruptive observability platform with the world’s best security company, accelerating our momentum in solving the most complex data and resiliency challenges.”

Upon completion of the acquisition, Palo Alto plans to integrate Chronosphere’s architecture with its Cortex AgentiX platform, aiming to provide what the firm describes as an autonomous remediation solution using AI agents.

This new approach is intended to identify and address performance problems across extensive datasets and automate investigative and remedial actions.

Palo Alto chairman and CEO Nikesh Arora said: “The foundational requirement for every modern AI data center is constant uptime and resilience, which demands real-time, always-on observability delivered at the right cost.

“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 organisations.”

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

In related financial news, Palo Alto reported total revenue of $2.5bn for its first quarter of fiscal year 2026, marking a 16% increase from $2.1bn in the same period last year.

GAAP net income stood at $334m or $0.47 per diluted share compared with $351m or $0.49 per diluted share in the prior year period.

Non-GAAP net income reached $662m or $0.93 per diluted share versus last year’s $545m or $0.78 per diluted share.

In July 2025, Palo Alto announced a cash and stock agreement valued at approximately $25bn to acquire identity security solutions provider CyberArk.

Earlier in November 2025, shareholders of the Nasdaq-listed CyberArk approved the transaction, which is anticipated to close during Palo Alto’s H2 FY 2026, subject to regulatory approvals and other conditions.