Can Fortinet's FortiCloud Expansion Unlock the Next Wave of Growth?

Fortinet FTNT is strengthening its shift to a cloud-first, AI-driven growth model with the expansion of FortiCloud, adding FortiIdentity, FortiDrive and FortiConnect to its portfolio. The update builds a unified, scalable ecosystem designed to boost automation and recurring revenue streams while allowing centralized access to FortiSASE, FortiAppSec and FortiAIOps via a single FortiCloud interface.

The latest advancements highlight Fortinet’s strategy to integrate AI deeply into FortiCloud. The company has expanded its FortiAI suite into a comprehensive platform featuring FortiAI-Assist, FortiAI-Protect and FortiAI-SecureAI, designed to secure AI infrastructure, streamline security operations and enforce safe AI usage policies. Fortinet also introduced an AI assistant for FortiCNAPP, which enhances cloud-native threat detection through contextual alerts and guided remediation, improving operational efficiency and reducing response times.

These innovations reinforce Fortinet’s positioning in hybrid and distributed environments, where enterprises demand automated, secure and scalable cloud solutions. The expansion also supports the company’s long-term shift toward subscription-based and high-margin cloud services, a key pillar of its recurring revenue strategy. Management reaffirmed confidence in sustained billings momentum, supported by infrastructure investments of $380 million to $430 million in 2025 to scale global cloud capacity.

According to the Zacks model, Fortinet’s total revenues are projected to grow 13% in 2025 and 10% in 2026, underscoring the lasting impact of FortiCloud’s evolution. By combining AI innovation, cloud scalability and recurring service models, Fortinet’s enhanced FortiCloud platform is poised to drive its next wave of sustainable growth.

How FTNT Competes in the Cloud Security Arena

Zscaler ZS stands out as a cloud-native leader in Zero Trust and SASE security, directly challenging Fortinet in cloud security. Zscaler's fully SaaS-based ZIA and ZPA platforms secure users and workloads without hardware, providing superior agility, scalability and rapid deployment. With over 150 global data centers and growing AI-driven capabilities, Zscaler excels in cloud-first environments, while Fortinet’s hybrid hardware-cloud model appeals more to enterprises needing deeper on-prem integration and advanced firewall controls.

Palo Alto Networks PANW dominates cloud security with its Prisma and Cortex platforms, offering advanced firewall, AI-driven analytics and unified Zero Trust protection across hybrid and multi-cloud environments. PANW’s deep threat detection, granular policy control and cloud-native design position it as a top competitor to Fortinet. While PANW’s comprehensive, enterprise-grade solutions command higher costs, they deliver superior security performance and scalability, making them the preferred choice for large organizations managing complex cloud infrastructures.

FTNT’s Share Price Performance, Valuation & Estimates

Fortinet shares have declined 12.1% year to date, underperforming the Zacks Security industry’s 23.2% rally and the broader Computer and Technology sector’s 22.8% growth.

FTNT’s YTD Price Performance

From a valuation standpoint, FTNT appears overvalued, trading at a forward 12-month price-to-sales ratio of 8.8, higher than the sector's average of 6.9. The company carries a Value Score of D.

FTNT’s Valuation

The Zacks Consensus Estimate for Fortinet’s earnings is pegged at $2.52 per share for 2025 and $2.77 per share for 2026, with both figures holding steady over the past 30 days. These projections imply year-over-year earnings growth of 6.33% for 2025 and 9.83% for 2026.

Fortinet 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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