Will FTNT's Heavy Infrastructure Build-Out Drive Next Phase of Growth?

Fortinet FTNT is making bold bets on its future with heavy infrastructure investments, accelerating its transition toward a cloud- and service-first growth model. In the second quarter of 2025, infrastructure spending surged to $168 million, up $145 million year over year, underscoring its commitment to scaling FortiSASE, FortiCloud and other cloud-native services. Management has guided infrastructure investments of $380-$430 million for 2025, highlighting this as a cornerstone of Fortinet’s long-term growth strategy.

The demand for cloud-delivered security is rising rapidly. Fortinet’s Unified SASE and Security Operations businesses already make up a growing share of billings, while management raised its full-year billings outlook by $100 million. Revenues for 2025 are projected between $6.67 billion and $6.82 billion, with infrastructure build-outs expected to play a pivotal role in reaching that target. By controlling its own infrastructure instead of depending on third-party clouds, Fortinet gains the ability to optimize performance and deliver tailored service commitments to enterprise and regulated customers.

Beyond quarterly spending, Fortinet has invested nearly $2 billion to build a global footprint of 5 million square feet across data centers, SOCs, NOCs, briefing centers and R&D hubs. This broad infrastructure enhances customer experience, improves cost efficiency and strengthens security control. Localized data centers also create opportunities to upsell FortiSASE and managed services, improving annual recurring revenues and renewal stickiness.

More than a capital outlay, Fortinet’s infrastructure expansion is a strategic bet on its service-led future, positioning it to capture durable growth in a rapidly expanding cybersecurity market.

Cloud Infrastructure Rivals Challenge FTNT’s Edge

Zscaler, Inc. ZS is a cloud-native cybersecurity leader focused on zero trust and SASE, operating 150 global data centers for secure, low-latency access. Zscaler’s SaaS model scales easily without on-prem hardware, giving it a clear edge in cloud security. However, Zscaler trails Fortinet in high-throughput hardware performance and breadth of offerings. The 2025 Red Canary acquisition enhances SOC automation and further solidifies Zscaler’s position in the competitive cloud infrastructure security space.

Cisco Systems CSCO is rapidly evolving into a backbone for AI, secure cloud and networking infrastructure. Cisco Systems’ $28 billion Splunk acquisition boosts observability and threat detection, while AI infrastructure orders exceeded $2 billion in fiscal 2025. With strength in data center switching, networking hardware and integrated security, Cisco Systems leverages its scale, financial power and cloud-focused investments to compete aggressively in the cloud infrastructure and hybrid enterprise security space.

FTNT’s Share Price Performance, Valuation & Estimates

Year to date, FTNT shares have declined 14.3%, underperforming the Zacks Security industry’s 12.6% gain and falling well behind the Zacks Computer and Technology sector’s 18.8% rise.

FTNT’s YTD Price Performance

From a valuation standpoint, Fortinet appears overvalued, trading at a forward 12-month price-to-sales ratio of 8.39, higher than the sector's average of 6.91. The company carries a Value Score of D.

FTNT’s Valuation

The consensus mark for 2025 earnings is pegged at $2.52 per share, which has increased by 1 cent over the last 30 days and by 4 cents over the last 60 days. The estimate indicates 6.33% year-over-year growth.

Fortinet stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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