Fortinet (FTNT) Steps Deeper Into AI Data Center Security: What Do These Moves Signal for Its Valuation?

Fortinet (FTNT) is doubling down on AI infrastructure security by rolling out new data center solutions with Arista Networks and Monolithic Power Systems, alongside a separate NVIDIA BlueField integration that pushes its firewall directly into AI compute stacks.

See our latest analysis for Fortinet.

Those AI data center moves land at an interesting time, with the share price at $81.74 and a year-to-date share price return of negative 13.73 percent. The three-year total shareholder return of 67.74 percent shows the longer-term story has rewarded patient holders and suggests current weakness may reflect shifting sentiment rather than a broken growth thesis.

If Fortinet's AI push has your attention, it is also worth exploring other high growth tech and AI names using high growth tech and AI stocks to see what else is building momentum.

So with Fortinet investing heavily to secure the AI data center just as its share price stalls, are investors looking at an underappreciated compounder or a stock where future growth is already priced in?

Most Popular Narrative Narrative: 17.5% Undervalued

According to BlackJesus, the narrative fair value of 99.03 dollars sits meaningfully above Fortinet's last close at 81.74 dollars, framing a valuation gap that hinges on profitability and disciplined growth assumptions.

Fortinet is a model of profitability and operational efficiency. For its full fiscal year 2024, the company achieved a GAAP operating margin of 30.3% and a net profit margin of 29.3%. Its trailing-twelve-month (TTM) profit margin stands at an impressive 30.6%. This level of profitability is a direct result of its organic growth model, which avoids the heavy non-cash charges associated with large acquisitions.

Read the complete narrative.

Curious how a profit engine like this underpins a double digit discount to fair value, while still baking in sustained organic growth and premium margins? The narrative leans on persistently strong cash generation and a forward earnings multiple more often reserved for elite software franchises. Want to see which specific growth and margin paths power that valuation math and how the discount rate shapes the upside? Read on to uncover the full playbook behind this pricing gap.

Result: Fair Value of $99.03 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained hardware headwinds or another high profile security vulnerability could quickly compress Fortinet's premium multiple and challenge the undervaluation thesis.

Find out about the key risks to this Fortinet narrative.

Build Your Own Fortinet Narrative

If you see the story differently or want to stress test the assumptions yourself, you can spin up a custom narrative in minutes: Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Fortinet.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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