The stock of cybersecurity company Fortinet Inc (FTNT) was down slightly by about 0.7% in pre-market trading on Wednesday. However, its year-to-date gain remains close to 100%. Market analysis suggests that security hardware procurement needs driven by AI computing infrastructure development are the core force propelling the simultaneous surge in the company's performance and stock price.
Fortinet delivered a strong financial report for the first quarter of 2026, with revenue reaching $1.85 billion, a 20% year-over-year increase. Product revenue soared 41% year-over-year to $645 million, while billings grew 31% to $2.09 billion, both surpassing the upper end of prior guidance. The company's founder and CEO, Ken Xie, stated that the performance growth primarily benefited from two key drivers: the technical expertise accumulated over 26 years of integrating networking and security, and a new phase for the cybersecurity industry propelled by the increasingly complex threat environment exacerbated by AI.
Analysts point out that the high growth in Fortinet's product revenue directly stems from demand for AI data center deployments. Customers are procuring Fortinet's security solutions alongside their purchases of NVIDIA GPU clusters. Fortinet has deeply integrated its FortiGate-VM virtual firewall with NVIDIA's BlueField-3 DPU, enabling it to provide security protection without impacting GPU computing power, thereby embedding itself deeply within NVIDIA's AI ecosystem.
In terms of AI security product strategy, Fortinet recently launched FortiSOC, a unified, cloud-delivered Security Operations Center platform powered by agentic AI. It consolidates six security operations functions, including SIEM, SOAR, and behavioral analysis, into a single SaaS console. Its core component, FortiAI-Assist, can autonomously investigate and correlate alerts and coordinate response actions across thousands of multi-vendor tools.
However, some institutions remain cautious about the current valuation. HSBC downgraded Fortinet to a 'reduce' rating at the end of June, noting that the company trades at approximately 46 times its 2026 price-to-earnings ratio, in line with cybersecurity peers, but with earnings-per-share growth of only about 11.6%, indicating a mismatch between valuation and growth.