FTNT vs. QLYS: Which Cybersecurity Stock Deserves Your Investment?

In the rapidly evolving cybersecurity landscape, Fortinet FTNT and Qualys QLYS stand out as prominent players addressing critical security needs for organizations worldwide. Both companies have established themselves as leaders in their respective niches — Fortinet with its comprehensive network security and firewall solutions, and Qualys with its cloud-based vulnerability management and compliance platform. As the global cybersecurity market prepares for explosive growth, projected to reach $351.9 billion by 2030 according to MarketsandMarkets report, investors are evaluating which security stocks offer the most compelling investment opportunities.

With cyber threats escalating in sophistication and frequency, organizations are increasing their security budgets by 15% in 2025, as reported by Gartner. Both companies recently reported their second-quarter 2025 earnings, providing fresh insights into their strategic positioning and growth trajectories. While Fortinet continues to dominate the network security space with its FortiGate firewalls and expanding SASE offerings, Qualys is revolutionizing risk management through its innovative AI-powered Risk Operations Center and comprehensive vulnerability assessment capabilities.

Let's delve deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for FTNT

Fortinet demonstrates solid market positioning as a cybersecurity giant with substantial scale and established infrastructure. The company's second-quarter results showed revenue growth of 14% year over year to $1.63 billion, with billings increasing 15% to $1.78 billion. Its comprehensive Security Fabric platform and leadership position in network firewalls provide a stable foundation for consistent revenue generation. The company's recent innovations in quantum-safe security and expanded FortiAI capabilities position it to address emerging threats, though implementation timelines remain uncertain.

The company faces notable challenges in maintaining growth momentum. Following its latest earnings announcement, Fortinet's stock dropped 17% in after-hours trading despite beating earnings estimates, reflecting investor concerns about future growth rates. The company's guidance for third-quarter revenues of $1.67-$1.73 billion, while above consensus, suggests a moderation in growth trajectory. Additionally, Fortinet's hardware-centric model faces pressure as enterprises increasingly shift toward cloud-native security solutions. Competition from pure-play cloud security vendors and the need for significant R&D investments to maintain technological parity present ongoing operational challenges that could impact margin expansion and profitability in the medium term.

The consensus mark for 2025 earnings is pegged at $2.51 per share, indicating 5.91% year-over-year growth.

Fortinet, Inc. Price and Consensus

Fortinet, Inc. price-consensus-chart | Fortinet, Inc. Quote

The Case for QLYS

Qualys emerges as a compelling growth story with exceptional momentum in the rapidly expanding cloud security and vulnerability management market. The company's second-quarter performance showcased remarkable resilience with 10% revenue growth to $164.1 million and impressive 82% GAAP gross margins, demonstrating superior operational efficiency. Its groundbreaking launch of the industry's first Agentic AI-powered Risk Operations Center represents a transformative leap in autonomous cybersecurity, positioning Qualys at the forefront of next-generation threat management. The platform's ability to reduce risk exposure by 85% and accelerate remediation by 70% creates substantial value for enterprises struggling with expanding attack surfaces.

The company's strategic initiatives are yielding exceptional results, with its TotalAI solution addressing critical AI and LLM security challenges that represent a massive untapped market opportunity. Qualys' achievement of FedRAMP certification opens significant federal market opportunities, while its partnerships with companies like Mulberri for cyber insurance integration create innovative revenue streams. The company's focus on subscription-based recurring revenues provides predictable cash flows, with strong customer retention rates and expanding deal sizes. Management's confidence is evident in their raised 2025 revenue guidance to $656-662 million, representing 8-9% growth, while maintaining industry-leading profitability metrics that position Qualys for sustained outperformance.

The consensus mark for 2025 earnings is pegged at $6.35 per share, indicating 3.59% year-over-year growth.

Qualys, Inc. Price and Consensus

Qualys, Inc. price-consensus-chart | Qualys, Inc. Quote

Valuation and Price Performance Comparison

Both companies trade at premium valuations reflecting their market positions, though with notable differences. Fortinet currently trades at a P/E ratio of 30.18, significantly below its 10-year historical average of 140, suggesting potential undervaluation despite premium pricing relative to the broader Zacks Security industry average of 92.39. Qualys trades at a more attractive P/E ratio of 19.88, below both its historical average and peer group average of 36.5, indicating better relative value.

FTNT vs. QLYS: P/E F12M Ratio

In terms of price performance, Fortinet's stock has experienced significant volatility, dropping over 25% from its 52-week high following recent earnings, currently down 14.5% year to date. Comparatively, Qualys has shown more stability with a decline of 6.8% year to date.

FTNT Underperforms QLYS YTD

Conclusion

While both companies operate in the high-growth cybersecurity sector, Qualys presents a more compelling investment opportunity with its innovative AI-driven platform, superior margins, and attractive valuation. The company's pioneering Agentic AI technology, 82% gross margins and expanding federal opportunities through FedRAMP certification create a favorable risk-reward profile compared with Fortinet. Qualys' focus on autonomous risk management addresses the industry's most pressing challenge — the overwhelming volume of security threats — positioning it for accelerated growth. Investors should consider buying Qualys stock for its exceptional innovation trajectory and operational excellence, while adopting a hold or wait approach for Fortinet until clearer growth catalysts emerge or valuations become more attractive. QLYS currently sports a Zacks Rank #1 (Strong Buy), whereas FTNT has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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