Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in PANW.

As the global reliance on technology increases, so do cybersecurity threats. With the rise of AI, automation, and cloud-based systems, the attack surface is growing fast. At the center of this expanding battlefield is Palo Alto Networks, Inc. (NASDAQ: PANW)—a cybersecurity heavyweight with over 20 years of experience and a clear eye on the future.

For traders looking to capitalize on the volatility surrounding PANW, Direxion’s Daily PANW Bull 2X Shares (Ticker: PALU) and Daily PANW Bear 1X Shares (Ticker: PALD) offer amplified exposure to this fast-moving story.

Here are five key catalysts shaping the outlook for PANW—and trading opportunities in either direction.

1. Strong Revenue and Earnings Momentum

Palo Alto Networks reported 14% year-over-year revenue growth in its fiscal Q2 2025, reaching $2.3 billion, up from $2.0 billion in the same period last year. CEO Nikesh Arora credited AI-driven tech adoption, cloud investment, and infrastructure modernization for the growth.

With another earnings report expected in May, PANW could experience another round of volatility* — especially if it beats or misses expectations. Traders should keep an eye on the company’s Next-Generation Security ARR, which covers the firm’s high-growth areas in network, cloud, and security operations.

2. Rising Competition in the Cyber Arena

PANW is currently one of the largest pureplay cybersecurity company by market cap. Its “platformization” strategy—integrating multiple security layers into one system—is designed to boost efficiency and protection. But the space is heating up.

Alphabet (GOOG) recently acquired Wiz for $32 billion, signaling Big Tech’s growing focus on cloud security. That deal, along with over 20 other recent cybersecurity acquisitions, highlights a more crowded and competitive field. PANW may face increasing pressure to maintain its market lead.

3. AI-Driven Cyber Threats Escalate

AI isn’t just helping the good guys. Hackers are now using AI to develop more sophisticated attack methods. In early 2025, PANW identified and patched a vulnerability (CVE-2025-0108) in its firewall systems. While the company responded quickly, these types of events raise concerns—and sometimes create market-moving headlines.

A World Economic Forum study noted that while 66% of organizations view AI as a cybersecurity game-changer, only 37% have risk frameworks in place to vet AI tools. The market opportunity is large—but so is the risk.

4. Geopolitical Uncertainty and Trade Tensions

International expansion is a growth priority for PANW. It recently closed multiple $50M+ deals in Europe and Asia-Pacific. But geopolitical friction, particularly from the Trump administration’s trade policies, poses risks. The company is shifting more of its manufacturing to Texas to reduce exposure, but headlines about tariffs or digital service taxes could trigger short-term swings.

5. Cyber Budgets Hold Steady Amid Economic Concerns

Even as inflation* cools (2.39% in March 2025 vs. 2.82% in February), cybersecurity remains a non-negotiable budget item for many firms. According to the 2023 Security Budget Benchmark Report, spending on cybersecurity continued to rise even during inflationary periods.

Trading the Volatility with PALU and PALD

With so many fast-moving catalysts, PANW offers multiple entry points for tactical traders. PALU seeks daily investment results, before fees and expenses, of 200% of the performance of PANW common shares, while PALD seeks daily investment results, before fees and expenses, of the inverse (–100%) of the performance of PANW common shares.

These Single Stock Daily Leveraged & Inverse ETFs are built for short-term trades, not long-term holding. Traders should monitor positions closely and use them as tactical tools in fast markets.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

The Funds have derived all disclosures contained in this document regarding Palo Alto Networks, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Palo Alto Networks, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Palo Alto Networks, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Palo Alto Networks, Inc. could affect the value of a Fund’s investments with respect to Palo Alto Networks, Inc. and therefore the value of the Funds.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with PANW and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with PANW and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with PANW and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to PANW is impacted by PANW’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to PANW at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to PANW increases on days when PANW is volatile near the close of the trading day.

Palo Alto Networks, Inc. Investing Risk – Issuer-specific attributes may cause an investment held by the Fund to be more volatile than the market generally. Palo Alto Networks, Inc. faces risks associated with: development of new products and services may be difficult; may be unable to attract new customers; reliance on channel partners; credit and liquidity risk of customers; sales to government entities may be subject to greater scrutiny; intense competition; among other risks.

Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Security Volatility Risk and Cash Transaction Risk. Additionally, for the Direxion Daily PANW Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

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