Fortinet is one of the world’s largest cybersecurity companies. If a business needs to protect its network, Fortinet is usually on the shortlist.
They are most famous for their physical firewalls (called FortiGate), which sit at the perimeter of a company's network to inspect traffic and block threats. However, they do much more than just hardware. They provide VPNs, secure Wi-Fi, endpoint protection (antivirus on steroids for laptops and phones), and cloud security, all running on their proprietary operating system, FortiOS.
Riding the AI Infrastructure Wave
AI isn't just about software; it requires massive physical data centers, and those data centers need to be secured. Fortinet recently launched its new FortiGate G series appliances specifically designed for AI-centric enterprise workloads, as well as new AI-powered endpoint security tools. They have successfully positioned themselves as a "picks and shovels" play for the AI boom, selling the security infrastructure required to make AI run safely.
Strong Technicals
Fortinet broke out of its 10-month sideways trend rallying +20% on May 7 after reporting better-than-expected Q1 earnings. On the daily chart, the stock is forming higher highs higher lows formation which is a sign of bullish momentum. The stock is also trading above all key moving averages which adds to the confidence. However in recent weeks it has seen some supply pressure at higher levels. on a YTD basis, the stock has more than doubled in value so it would be rather prudent to add it on dips.
Valuation a Little Rich
Fortinet’s current valuation undoubtedly prices in a lot of future perfection, making it an expensive stock by traditional metrics. As of mid-July 2026, the stock trades at a Price-to-Earnings (P/E) ratio roughly 60x, which is a massive premium compared to the broader market and well above its recent 2024 and 2025 levels. Its Price-to-Sales (P/S) ratio tells a similar story, sitting at a lofty 16x to 18x, meaning investors are paying a steep multiple for every dollar of revenue the company brings in. While this premium reflects their explosive growth in AI infrastructure security, a P/E over 60 leaves almost zero room for error if macroeconomic conditions or spending on data centers slow down.
While Fortinet may continue to be a beneficiary of the AI boom, the valuation is very rich so it's hard to give it a buy. But for a more technicals oriented investor this might be a good name to buy on dips.
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Disclaimer
rdiab is an employee of Simply Wall St, but has written this narrative in their capacity as an individual investor. rdiab holds no position in NasdaqGS:FTNT. Simply Wall St has no position in any companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimate's are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
