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One hot topic in the tech industry right now is the performance of technology stocks, particularly the Nasdaq-100 Technology Sector index, which has seen a whopping 50% gain in the past year. However, not all tech stocks have been riding this wave of success, and Fortinet (NASDAQ: FTNT) is one of them.
Shares of this cybersecurity company have dipped 11% in the past year, and the recent quarterly results for the first quarter of 2024 haven’t done much to boost investor confidence. But fear not, there may still be hope for Fortinet to regain its footing in the market.
Looking closer at Fortinet’s financial performance, the company reported a 7% increase in first-quarter revenue to $1.35 billion, with adjusted net income up 26% to $0.43 per share. While these numbers exceeded Wall Street’s expectations, the real concern lies in the company’s billings, which fell over 6% from the previous year to $1.41 billion.
Despite these challenges, Fortinet is not out of the game just yet. The company’s focus on generative artificial intelligence (AI) could be the key to unlocking future growth opportunities. According to Bloomberg Intelligence, generative AI cybersecurity spending is projected to soar from $9 million in 2022 to $3.2 billion in 2027, offering a massive growth potential for companies like Fortinet.
Fortinet has already made strides in this area by launching its FortiAI generative AI cybersecurity assistant, and recent updates to the platform are expected to enhance security defenses and accelerate threat detection. As more customers adopt these AI tools, Fortinet could see a significant boost in growth, potentially driving the stock price higher in the long run.
Despite its recent underperformance, Fortinet is currently trading at a discount compared to its historical sales multiple, presenting an attractive buying opportunity for investors. With the potential for revenue growth and a forward-looking approach to AI, Fortinet could be well-positioned for future success.
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