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Fortinet vs. Datadog: Which Cloud Security Stock Has Better Potential?
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Key Takeaways
Fortinet posted 26% revenue growth, 33% billings growth and $966M in free cash flow in Q2 2026.
FTNT raised 2026 revenue guidance to $8.02-$8.18B, with 19% growth at the midpoint.
Datadog's Q2 revenues grew 36%, but a major customer reduction may pressure near-term growth.
Fortinet Inc. (FTNT - Free Report) is a leading cybersecurity provider focused on secure networking, firewalls, SASE and AI-driven security operations. Datadog, Inc. (DDOG - Free Report) offers a cloud-native observability and security platform that helps enterprises monitor and protect applications, infrastructure and increasingly AI workloads.
Both companies are positioned to benefit from rising enterprise spending on cybersecurity, cloud migration and AI infrastructure. The comparison is particularly timely after strong second-quarter 2026 results, as both companies have demonstrated potential for future top-line growth. Their strong growth profiles but distinct security strategies make FTNT and DDOG worth comparing for investors seeking exposure to enterprise security.
The Case for FTNT Stock
Fortinet is positioned to benefit from rising enterprise spending on cybersecurity as cloud migration, AI deployment and distributed infrastructure expand attack surfaces. Its SASE Firewall combines firewall, SD-WAN and SASE capabilities on a single FortiOS platform, supporting security across data centers, cloud environments and remote users. Fortinet says its approach allows both cloud and sovereign, on-premises SASE deployment, giving customers flexibility around performance, data residency and compliance.
The growth opportunity is supported by Fortinet's large installed base and expanding portfolio. The company has more than 900K lifetime customers, 110K partners and $8.6 billion in LTM billings. Its second-quarter presentation identifies a $148 billion 2029 SASE Firewall TAM, with a 13% 2025-2029 CAGR, while AI security represents a $172 billion opportunity. The company is also gaining traction in customer deployments. A cloud provider selected Fortinet to secure generative-AI data centers in an eight-figure deal, while a global pharmaceutical company signed a seven-figure FortiSASE deal covering more than 45K users.
Second-quarter 2026 results demonstrate strong momentum. Revenues increased 26% to $2.05 billion, product revenues jumped 52% to $773 million, and billings rose 33% to $2.37 billion. FortiSASE billings grew more than 100%, while Unified SASE billings increased 35%, and free cash flow reached $966 million, with a 38% non-GAAP operating margin.
Fortinet is also deepening its AI-security ecosystem through collaborations with Intel, Anthropic, OpenAI and NVIDIA. Its portfolio includes Lacework FortiCNAPP, adding to its broader cloud-security capabilities.
FTNT's combination of recurring services, strong cash generation, broad customer reach and integrated SASE/AI security provides multiple avenues for growth. Fortinet raised its 2026 revenue outlook to $8.02-$8.18 billion, representing 19% year-over-year growth at the midpoint. Investors should also monitor competition, the timing of large enterprise deals and the risk that technological changes, including advances in AI, could affect product competitiveness.
The Zacks Consensus Estimate for FTNT’s 2026 earnings is pegged at $3.42 per share, up by 2 cents over the past 30 days, implying approximately 23.9% year-over-year growth.
Image Source: Zacks Investment Research
The Case for DDOG Stock
Datadog offers investors exposure to rising enterprise spending on cloud migration, cybersecurity and AI workloads through its AI-powered observability and security platform. Its unified SaaS platform integrates infrastructure monitoring, application performance, log management, cloud security and other capabilities, allowing customers to secure and monitor their technology stacks from a common platform. This creates an opportunity for Datadog to expand revenues as customers add workloads and adopt additional products across their technology environments.
DDOG's customer base provides a meaningful expansion opportunity. The second quarter ended with approximately 33,400 customers, including 4,720 customers generating at least $100,000 in ARR, up from 3,850 a year earlier. These larger customers contributed about 91% of ARR, while adoption of four or more products increased to 58% from 52%. Its security portfolio includes Cloud Security, Code Security, Cloud SIEM and Data Security, strengthening its positioning as enterprises consolidate monitoring and security workloads.
Recent customer wins reinforce this strategy. A South American bank signed a seven-figure annualized deal and adopted Cloud SIEM and Data Security, while a Fortune 100 health insurer expanded toward 19 Datadog products, citing HIPAA compliance, PII handling and Cloud SIEM as differentiators. A multiyear deal worth more than $30 million in TCV also displaced four existing tools.
Financially, second-quarter 2026 revenues increased 36% to $1.12 billion, while free cash flow reached $279 million. Datadog guided for 2026 revenues of $4.45-$4.47 billion.
However, competition remains intense, with Datadog facing established vendors, cloud-provider solutions and lower-priced alternatives. Security breaches, service disruptions, changing privacy regulations, AI-related risks and reduced enterprise IT spending could also pressure growth.
The Zacks Consensus Estimate for DDOG’s 2026 earnings is currently pegged at $2.52 per share, implying approximately 22.9% year-over-year growth. Earnings estimates have remained stable over the past 30 days.
Image Source: Zacks Investment Research
Stock Performance: FTNT vs. DDOG
Over the past three months, shares of FTNT have gained 18.4% compared with DDOG’s 11.1% rise. Fortinet’s outperformance is backed by a more favorable near-term execution narrative, with accelerating billings, robust product demand, strong cash generation and raised 2026 guidance.
By comparison, DDOG continues to post strong growth and AI momentum, but management flagged a major customer’s user reduction beginning in the third quarter of 2026, creating a near-term growth consideration.
3M Price Performance Comparisons
Image Source: Zacks Investment Research
Valuation: FTNT Is Cheaper Than DDOG
Fortinet’s valuation is relatively more moderate than Datadog’s despite both stocks carrying a Value Score of F. FTNT trades at a 17.22X trailing 12-month Price/Sales multiple, compared with 22.92X for DDOG. FTNT’s low multiple indicates that there is strong upside potential for higher profits if growth remains intact.
Image Source: Zacks Investment Research
Conclusion
Fortinet and Datadog both offer strong exposure to cybersecurity, cloud migration and AI-driven spending. FTNT combines faster billings growth, robust free cash flow, raised 2026 guidance, a broad installed base and a lower Price/Sales multiple. DDOG continues to deliver strong revenue growth and expanding product adoption, but faces near-term customer-related pressure.
Given these factors, FTNT seems a better pick for investors than DDOG right now. While Fortinet sports a Zacks Rank #1 (Strong Buy) at present, Datadog has a Zacks Rank #3 (Hold).
View the Zacks #1 Rank List
Image: Bigstock
Fortinet vs. Datadog: Which Cloud Security Stock Has Better Potential?
Key Takeaways
Fortinet Inc. (FTNT - Free Report) is a leading cybersecurity provider focused on secure networking, firewalls, SASE and AI-driven security operations. Datadog, Inc. (DDOG - Free Report) offers a cloud-native observability and security platform that helps enterprises monitor and protect applications, infrastructure and increasingly AI workloads.
Both companies are positioned to benefit from rising enterprise spending on cybersecurity, cloud migration and AI infrastructure. The comparison is particularly timely after strong second-quarter 2026 results, as both companies have demonstrated potential for future top-line growth. Their strong growth profiles but distinct security strategies make FTNT and DDOG worth comparing for investors seeking exposure to enterprise security.
The Case for FTNT Stock
Fortinet is positioned to benefit from rising enterprise spending on cybersecurity as cloud migration, AI deployment and distributed infrastructure expand attack surfaces. Its SASE Firewall combines firewall, SD-WAN and SASE capabilities on a single FortiOS platform, supporting security across data centers, cloud environments and remote users. Fortinet says its approach allows both cloud and sovereign, on-premises SASE deployment, giving customers flexibility around performance, data residency and compliance.
The growth opportunity is supported by Fortinet's large installed base and expanding portfolio. The company has more than 900K lifetime customers, 110K partners and $8.6 billion in LTM billings. Its second-quarter presentation identifies a $148 billion 2029 SASE Firewall TAM, with a 13% 2025-2029 CAGR, while AI security represents a $172 billion opportunity. The company is also gaining traction in customer deployments. A cloud provider selected Fortinet to secure generative-AI data centers in an eight-figure deal, while a global pharmaceutical company signed a seven-figure FortiSASE deal covering more than 45K users.
Second-quarter 2026 results demonstrate strong momentum. Revenues increased 26% to $2.05 billion, product revenues jumped 52% to $773 million, and billings rose 33% to $2.37 billion. FortiSASE billings grew more than 100%, while Unified SASE billings increased 35%, and free cash flow reached $966 million, with a 38% non-GAAP operating margin.
Fortinet is also deepening its AI-security ecosystem through collaborations with Intel, Anthropic, OpenAI and NVIDIA. Its portfolio includes Lacework FortiCNAPP, adding to its broader cloud-security capabilities.
FTNT's combination of recurring services, strong cash generation, broad customer reach and integrated SASE/AI security provides multiple avenues for growth. Fortinet raised its 2026 revenue outlook to $8.02-$8.18 billion, representing 19% year-over-year growth at the midpoint. Investors should also monitor competition, the timing of large enterprise deals and the risk that technological changes, including advances in AI, could affect product competitiveness.
The Zacks Consensus Estimate for FTNT’s 2026 earnings is pegged at $3.42 per share, up by 2 cents over the past 30 days, implying approximately 23.9% year-over-year growth.
Image Source: Zacks Investment Research
The Case for DDOG Stock
Datadog offers investors exposure to rising enterprise spending on cloud migration, cybersecurity and AI workloads through its AI-powered observability and security platform. Its unified SaaS platform integrates infrastructure monitoring, application performance, log management, cloud security and other capabilities, allowing customers to secure and monitor their technology stacks from a common platform. This creates an opportunity for Datadog to expand revenues as customers add workloads and adopt additional products across their technology environments.
DDOG's customer base provides a meaningful expansion opportunity. The second quarter ended with approximately 33,400 customers, including 4,720 customers generating at least $100,000 in ARR, up from 3,850 a year earlier. These larger customers contributed about 91% of ARR, while adoption of four or more products increased to 58% from 52%. Its security portfolio includes Cloud Security, Code Security, Cloud SIEM and Data Security, strengthening its positioning as enterprises consolidate monitoring and security workloads.
Recent customer wins reinforce this strategy. A South American bank signed a seven-figure annualized deal and adopted Cloud SIEM and Data Security, while a Fortune 100 health insurer expanded toward 19 Datadog products, citing HIPAA compliance, PII handling and Cloud SIEM as differentiators. A multiyear deal worth more than $30 million in TCV also displaced four existing tools.
Financially, second-quarter 2026 revenues increased 36% to $1.12 billion, while free cash flow reached $279 million. Datadog guided for 2026 revenues of $4.45-$4.47 billion.
However, competition remains intense, with Datadog facing established vendors, cloud-provider solutions and lower-priced alternatives. Security breaches, service disruptions, changing privacy regulations, AI-related risks and reduced enterprise IT spending could also pressure growth.
The Zacks Consensus Estimate for DDOG’s 2026 earnings is currently pegged at $2.52 per share, implying approximately 22.9% year-over-year growth. Earnings estimates have remained stable over the past 30 days.
Image Source: Zacks Investment Research
Stock Performance: FTNT vs. DDOG
Over the past three months, shares of FTNT have gained 18.4% compared with DDOG’s 11.1% rise. Fortinet’s outperformance is backed by a more favorable near-term execution narrative, with accelerating billings, robust product demand, strong cash generation and raised 2026 guidance.
By comparison, DDOG continues to post strong growth and AI momentum, but management flagged a major customer’s user reduction beginning in the third quarter of 2026, creating a near-term growth consideration.
3M Price Performance Comparisons
Image Source: Zacks Investment Research
Valuation: FTNT Is Cheaper Than DDOG
Fortinet’s valuation is relatively more moderate than Datadog’s despite both stocks carrying a Value Score of F. FTNT trades at a 17.22X trailing 12-month Price/Sales multiple, compared with 22.92X for DDOG. FTNT’s low multiple indicates that there is strong upside potential for higher profits if growth remains intact.
Image Source: Zacks Investment Research
Conclusion
Fortinet and Datadog both offer strong exposure to cybersecurity, cloud migration and AI-driven spending. FTNT combines faster billings growth, robust free cash flow, raised 2026 guidance, a broad installed base and a lower Price/Sales multiple. DDOG continues to deliver strong revenue growth and expanding product adoption, but faces near-term customer-related pressure.
Given these factors, FTNT seems a better pick for investors than DDOG right now. While Fortinet sports a Zacks Rank #1 (Strong Buy) at present, Datadog has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank stocks here.