Fortinet, Inc. (FTNT): A Bull Case Theory

We came across a bullish thesis on Fortinet, Inc. on StockOpine’s Newsletter’s Substack by StockOpine. In this article, we will summarize the bulls’ thesis on FTNT. Fortinet, Inc.'s share was trading at $82.94 as of December 2nd. FTNT’s trailing and forward P/E were 33.67  and 28.01  respectively according to Yahoo Finance.

Fortinet, Inc. provides cybersecurity and convergence of networking and security solutions worldwide. FTNT delivered a strong Q3, surpassing expectations across revenue, earnings, and margins, while raising its full-year guidance for billings, operating margin, and EPS. Revenue grew 14% year-over-year to $1.72 billion, driven by EMEA and APAC markets, with product revenue up 18% to $559 million on multi-product deals and OT security expansion. Service revenue, which has decelerated for nine consecutive quarters, rose 13% to $1.17 billion, with management expecting growth to pick up in the second half of 2026.

Billings reached $1.81 billion, beating guidance, while large deals over $1 million increased 32% YoY, and the company added roughly 6,600 new customers, signaling continued strong demand and deal momentum. Non-GAAP EPS came in at $0.74, up 17% YoY, well above consensus, while gross margins remained robust at 81.6% despite a slight decline from last year due to product mix shifts.

Operating margins reached a record 36.9%, reflecting strong cost management and operational efficiency. Fortinet also returned capital to shareholders through an aggressive $1.83 billion share repurchase, with $796 million still available under its current authorization. Adjusted free cash flow totaled $646 million, representing a 37% margin, even after increased infrastructure spending.

While investor concerns remain over the continued deceleration in service revenue and moderated 2025 guidance for that segment, Fortinet’s strong product performance, operational efficiency, and strategic investments position the company for sustained growth. The combination of high-margin product expansion, disciplined cost management, and shareholder-friendly actions underscores Fortinet’s ability to generate durable cash flow, offering investors a compelling risk-reward opportunity despite near-term service growth headwinds.

Previously we covered a bullish thesis on Fortinet, Inc. (FTNT) by Dan in January 2025, which highlighted the company’s strategic acquisitions, AI cybersecurity enhancements, and focus on Secure Networking, Unified SASE, and Security Operations. The company's stock price has depreciated approximately by 16.50% since our coverage as the thesis didn’t play out. StockOpine shares a similar perspective but emphasizes strong Q3 financial performance and record margins.

Fortinet, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held FTNT at the end of the second quarter which was 62 in the previous quarter. While we acknowledge the potential of FTNT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.