Following on from its $25 billion acquisition of CyberArk in July, Palo Alto Networks is continuing its spending spree by snapping up observability platform Chronosphere.

Valued at $3.35 billion, the deal will see Chronosphere’s Kubernetes and microservices-focused service integrated with AgentiX, Palo Alto’s suite of AI agents, which secures across email, endpoints, and the network.

Palo Alto positioned the merger as powering uptime and resilience for AI data centers through real-time observability, agentic remediation, and Chronosphere’s capacity for large volumes of observability data in the cloud.

Based in New York, Chronosphere was founded in 2019 by CEO Martin Mao and CTO Rob Skillington, who had both previously been engineers at Uber.

At the car share service they built M3, a large-scale database to manage Uber's massive data monitoring infrastructure, which is now open sourced and the driver behind the Chronosphere platform.

The firm achieved unicorn status by 2021, before raising an additional $115 million in Series C funding, bringing its total funding to approximately $343 million. Investors over the years have included GV (formerly Google Ventures) and Falcon Fund, the investment arm of CrowdStrike.

Last year saw Chronosphere embed CrowdStrike Falcon LogScale into its platform, while more recently it was named as a leader in Gartner’s Magic Quadrant for Observability Platforms.

Palo Alto Networks earnings and CyberArk

The Chronosphere deal coincided with Palo Alto’s most recent financials, which saw it bag $2.5 billion for its fiscal first quarter 2026, as ended October 31st of this year.

That haul represented a 16% increase year over year (YoY), while profits from its Next-Generation Security suite – comprising Cortex, Strata, and Prisma – grew 29% YoY to $5.9 billion in annual recurring revenue.

During the company’s investment call, CEO Nikesh Arora said plans remained on track regarding its acquisition of identity vendor CyberArk, which remains 2025’s second-biggest deal after the ongoing $32 billion Google Cloud buyout of cybersec firm Wiz.

That deal was positioned as the final part of its end-to-end security platform build out.

Arora admitted Palo Alto “didn't explain the identity thing well enough” to investors previously regarding the deal, with the exec keen to delineate between CyberArk's identity and privileged access management (IAM/PAM) services and basic identity security.

“We believe true security in the world of identity happens when you start enacting privileged access type controls across identities. And our view with CyberArk is the fact that why are only 500,000 people in the enterprise privileged when pretty much the remaining 15,000 people could cause equal amount of damage to other ways using systems?

“Our view is in the future, almost every identity will get some version of privileged access management, and CyberArk is the best platform from our perspective and in the industry to be able to leverage those capabilities.”

The CEO also claimed the Chronosphere opportunity targets the “173 companies in the world which all need persistent observability,” he claimed, which he suggested spend $5 or $10 million a year already with his firm.

The Palo Alto leader also said browsers will become prevalent in the enterprise space, making the browser a “foundational fabric” for the company to deliver services in future, with Prisma browser sales driving the firm’s secure access service edge (SASE) sales.

He also warned of nation-state level quantum attacks by 2029, by when Palo Alto expects quantum computing to be fully commercialized.