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Fortinet (NASDAQ: FTNT) is an cybersecurity stock to buy and hold as artificial intelligence (AI) tailwinds propel its business. Its 140% year-to-date return highlights growing demand for the stock as it continues to prove itself each quarter.
AI has provided a tailwind for many industries, but its impact on cybersecurity companies is only starting to be noticed. As agentic AI creates more data assets that must be protected while simultaneously producing more points of vulnerability, powerful new cybersecurity tools are needed. Here's why Fortinet is poised to shine in this shifting market.
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Fortinet isn't the only cybersecurity stock benefiting from the AI trend, but it combines growth and value better than most of the competition. For instance, Fortinet's forward P/E ratio of 45 is much lower than CrowdStrike's (NASDAQ: CRWD) 208 or Palo Alto Networks' (NASDAQ: PANW) 94.
Fortinet and CrowdStrike had nearly identical year-over-year revenue growth rates in their most recent quarters, while Palo Alto Networks was a little ahead of them.
In the second quarter, Fortinet's revenue was up by 26% year over year and beat the high end of guidance. It also raised its revenue guidance for the year by $175 million at the midpoint. But that's still a bit conservative, as it points to just 19% growth.
Fortinet's software has automations that help it detect red flags and block unusual activity within seconds. The company uses AI to fight AI, and can prevent its clients' employees from using risky AI tools. It also has a chatbot to assist cybersecurity professionals and help them pinpoint vulnerabilities.
The company focuses more on cybersecurity for data centers, networks, and hardware. Its technology is directly embedded in key parts of AI infrastructure. That's a contrast to CrowdStrike, which operates more like software that protects an employer's laptops, smartphones, and other devices through the cloud.
Sometimes, Fortinet applies a physical chip or component that goes on AI infrastructure. At other times, Fortinet integrates its software deeply into hardware. For instance, Fortinet provides FortiGate-VM software that runs directly on Nvidia's BlueField-3 data processing units. The optimized virtual cloud firewall protects AI servers from hackers, even if the main server operating system gets compromised.
This approach lets data center providers maintain intense AI workloads without having cybersecurity drag on overall performance. It's foundational technology that makes it easier for AI to scale while remaining secure. As more data centers are constructed, more companies will have to turn to Fortinet's cybersecurity products and services.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike, Fortinet, and Nvidia. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
1 Millionaire-Maker AI Cybersecurity Stock to Buy and Hold was originally published by The Motley Fool
