Is FTNT a good stock to buy? We came across a bullish thesis on Fortinet, Inc. on The Wealth Dynasty Report’s Substack. In this article, we will summarize the bulls’ thesis on FTNT. Fortinet, Inc.’s share was trading at $133.96 as of May 26th. FTNT’s trailing and forward P/E were 51.92 and 45.25 respectively according to Yahoo Finance.
Fortinet (FTNT) is a leading cybersecurity compounder, and despite a premium valuation, the long-term investment case remains intact. The company anchors its business on FortiGate firewalls, which act as the gateway into enterprise networks and convert hardware sales into high-margin recurring subscription revenue, now ~40% of sales.
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Fortinet’s competitive moat is strengthened by proprietary FortiSP ASIC chips, delivering superior performance and cost efficiency versus peers, while expanding exposure to SASE and OT security positions it in the fastest-growing segments.
Revenue has compounded at 16% from FY2022 to FY2024, supported by global diversification across North America, EMEA, and APAC, while gross margins remain exceptional at nearly 78%. The business generates strong cash conversion, with operating cash flow consistently above $2 billion, supported by a large deferred revenue base that enhances earnings visibility. Even though the stock trades at a premium near 70x earnings, the cash flow multiple of ~37x and durable subscription economics help justify a long-duration compounding narrative.
Management returns capital via buybacks, reinforcing confidence in value. On valuation, a reasonable normalization implies a $118 price target, or about 23% upside, with further upside unlocked if execution remains strong. Importantly, a 10–15% pullback would present a more attractive entry point given the quality of the franchise and long-term secular tailwinds.
Cybersecurity demand is increasingly non-discretionary due to regulatory pressure and escalating threats, ensuring sustained budget allocation. While competition from Palo Alto Networks, CrowdStrike, and Microsoft remains active, Fortinet’s integrated platform approach and cost advantage support long-term share retention and expansion.
Previously, we covered a bullish thesis on Fortinet (FTNT) by Dan in January 2025, highlighting AI-driven cybersecurity expansion, SASE and OT security growth. FTNT’s stock price has appreciated by approximately 34.86% since our coverage. Wealth Dynasty Report shares similar view but emphasizes valuation discipline, strong free cash flow and 23% upside to $118 noting 10–15% pullback as better entry.
Fortinet, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held FTNT at the end of the first quarter which was 50 in the previous quarter. While we acknowledge the risk and potential of FTNT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FTNT and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
