We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NET vs. FTNT: Which Cybersecurity Stock Should You Buy Right Now?
Read MoreHide Full Article
Key Takeaways
FTNT's SASE Firewall business grew 34% to over $2 billion in Q2 2026, fueled by rising enterprise demand.
NET's gross margin fell to 73.1% from 76.3% as higher paid traffic increased network infrastructure costs.
FTNT trades at 15.77X forward sales, well below NET's 34.93X, offering an attractive valuation.
Cloudflare (NET - Free Report) and Fortinet Inc. (FTNT - Free Report) are well-known players in the cybersecurity domain. While Cloudflare provides a cloud-native platform spanning network security, application security and connectivity, Fortinet combines a variety of hardware and cloud-based security solutions.
Both NET and FTNT are riding key industry trends, driven by the mounting incidents of credential theft, remote desktop protocol breaches and social engineering-based strikes by malicious actors. However, from an investment perspective, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for NET Stock
Cloudflare is seeing stronger demand for its SASE and Zero Trust offerings as companies look to adopt AI more securely. Management said the key reason big companies are approaching Cloudflare is that they know they need AI but want to deploy it securely. This is creating new opportunities for the company’s SASE and Zero Trust platforms, particularly as enterprises need to secure AI agents in addition to human users.
Cloudflare believes its developer-focused approach gives it an advantage in this market. Management said companies will have more AI agents working across their organizations and will need a security model designed for these agents. In one example, a large U.K. government agency was evaluating a first-generation Zero Trust provider but reconsidered the project after discussing its plans for AI agents with Cloudflare. Management said the agency canceled its existing request for proposal and is now reevaluating the project with an agents-first approach. Cloudflare believes its developer-focused approach has helped its SASE and Zero Trust platforms gain significant share over the past six months.
However, Cloudflare’s non-GAAP gross margin was 73.1% in the second quarter of 2026, down 320 basis points from 76.3% a year ago. The main issue is the changing mix of traffic on Cloudflare’s network. As paid traffic grows relative to free traffic, a larger portion of Cloudflare’s network costs is being allocated to cost of revenue. This shows that Cloudflare is handling more traffic that requires infrastructure and network resources, putting pressure on gross margins.
This is particularly relevant as AI workloads and machine-to-machine traffic expand. These workloads can drive more usage and revenues, but they also require Cloudflare to provide more compute, network and storage capacity. Although management expects gross-margin pressure to stabilize, continued growth in AI and developer workloads could require higher infrastructure spending. This could limit near-term margin expansion even as revenues continue to grow rapidly.
The Case for FTNT Stock
Fortinet is seeing strong demand for its SASE Firewall as enterprises upgrade network security to support AI workloads, cloud environments and distributed workforces. In the second quarter of 2026, Fortinet’s SASE Firewall business grew 34% to more than $2 billion. Unified SASE billings increased 35%, while FortiSASE billings grew more than 100% year over year. FortiSASE adoption also reached 90% of Fortinet’s large-enterprise installed base.
Fortinet believes its SASE Firewall can address a larger market than cloud-only SASE solutions. The company combines firewall, SASE and hybrid mesh capabilities on its FortiOS platform and supports both cloud and on-premises deployments. Management believes this opportunity could be two to three times larger than the cloud-only SASE market. Demand for sovereign SASE is also increasing as enterprises and service providers look for better data privacy, local processing and performance.
AI is adding another growth driver. As AI applications increase machine-to-machine and data-center traffic, customers need better visibility and control over network traffic. Fortinet said AI is accelerating the convergence of networking and security. The company is also seeing AI data center wins, including an eight-figure deal with a cloud provider offering generative AI infrastructure.
The growth in SASE could also support Fortinet’s financial performance. Product revenues increased 52% year over year in the second quarter of 2026, while service revenues grew 14% year over year. Service billings increased 26% year over year, and management expects service revenue growth to improve in the second half of 2026. New SASE and SD-WAN services can add to Fortinet’s recurring service revenues as customers expand their deployments. With strong SASE demand, AI-driven security needs and growing adoption of sovereign SASE, the SASE Firewall could become an important driver of Fortinet’s product and service revenue growth.
How do Earnings Estimates Compare for NET & FTNT?
The Zacks Consensus Estimate for NET’s 2026 and 2027 EPS is pinned at $1.26 and $1.72, respectively. The estimates for fiscal 2026 and 2027 have remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FTNT’s 2026 and 2027 EPS is pegged at $3.45 and $3.85, respectively. The estimates for 2026 and 2027 have both been revised up by 3 cents over the past 30 days.
Image Source: Zacks Investment Research
NET vs. FTNT: Price Performance and Valuation
Year to date, shares of NET and FTNT have surged 76.6% and 140.2%, respectively.
NET Vs. FTNT: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, FTNT is trading at a forward sales multiple of 15.77X, significantly lower than NET’s forward sales multiple of 34.93X. FTNT’s reasonable valuation makes it more attractive for investors looking for value and stability.
NET vs. FTNT: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: Buy FTNT, Sell NET Right Now
Both Cloudflare and Fortinet are key players in the cybersecurity space. However, Cloudflare’s gross margins remain under pressure as higher paid traffic and AI workload usage increase infrastructure costs. In contrast, Fortinet shows steadier execution, with strong adoption of FortiSASE, Unified SASE and sovereign SASE. Further, FTNT’s reasonable valuation offers some downside protection as well, making the stock an attractive buy, particularly for investors seeking exposure to cybersecurity growth at a fair price.
Currently, Fortinet carries a Zacks Rank #2 (Buy), making the stock a stronger pick over Cloudflare, which has a Zacks Rank #4 (Sell).
View the Zacks #1 Rank List
Image: Bigstock
NET vs. FTNT: Which Cybersecurity Stock Should You Buy Right Now?
Key Takeaways
Cloudflare (NET - Free Report) and Fortinet Inc. (FTNT - Free Report) are well-known players in the cybersecurity domain. While Cloudflare provides a cloud-native platform spanning network security, application security and connectivity, Fortinet combines a variety of hardware and cloud-based security solutions.
Both NET and FTNT are riding key industry trends, driven by the mounting incidents of credential theft, remote desktop protocol breaches and social engineering-based strikes by malicious actors. However, from an investment perspective, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
The Case for NET Stock
Cloudflare is seeing stronger demand for its SASE and Zero Trust offerings as companies look to adopt AI more securely. Management said the key reason big companies are approaching Cloudflare is that they know they need AI but want to deploy it securely. This is creating new opportunities for the company’s SASE and Zero Trust platforms, particularly as enterprises need to secure AI agents in addition to human users.
Cloudflare believes its developer-focused approach gives it an advantage in this market. Management said companies will have more AI agents working across their organizations and will need a security model designed for these agents. In one example, a large U.K. government agency was evaluating a first-generation Zero Trust provider but reconsidered the project after discussing its plans for AI agents with Cloudflare. Management said the agency canceled its existing request for proposal and is now reevaluating the project with an agents-first approach. Cloudflare believes its developer-focused approach has helped its SASE and Zero Trust platforms gain significant share over the past six months.
However, Cloudflare’s non-GAAP gross margin was 73.1% in the second quarter of 2026, down 320 basis points from 76.3% a year ago. The main issue is the changing mix of traffic on Cloudflare’s network. As paid traffic grows relative to free traffic, a larger portion of Cloudflare’s network costs is being allocated to cost of revenue. This shows that Cloudflare is handling more traffic that requires infrastructure and network resources, putting pressure on gross margins.
This is particularly relevant as AI workloads and machine-to-machine traffic expand. These workloads can drive more usage and revenues, but they also require Cloudflare to provide more compute, network and storage capacity. Although management expects gross-margin pressure to stabilize, continued growth in AI and developer workloads could require higher infrastructure spending. This could limit near-term margin expansion even as revenues continue to grow rapidly.
The Case for FTNT Stock
Fortinet is seeing strong demand for its SASE Firewall as enterprises upgrade network security to support AI workloads, cloud environments and distributed workforces. In the second quarter of 2026, Fortinet’s SASE Firewall business grew 34% to more than $2 billion. Unified SASE billings increased 35%, while FortiSASE billings grew more than 100% year over year. FortiSASE adoption also reached 90% of Fortinet’s large-enterprise installed base.
Fortinet believes its SASE Firewall can address a larger market than cloud-only SASE solutions. The company combines firewall, SASE and hybrid mesh capabilities on its FortiOS platform and supports both cloud and on-premises deployments. Management believes this opportunity could be two to three times larger than the cloud-only SASE market. Demand for sovereign SASE is also increasing as enterprises and service providers look for better data privacy, local processing and performance.
AI is adding another growth driver. As AI applications increase machine-to-machine and data-center traffic, customers need better visibility and control over network traffic. Fortinet said AI is accelerating the convergence of networking and security. The company is also seeing AI data center wins, including an eight-figure deal with a cloud provider offering generative AI infrastructure.
The growth in SASE could also support Fortinet’s financial performance. Product revenues increased 52% year over year in the second quarter of 2026, while service revenues grew 14% year over year. Service billings increased 26% year over year, and management expects service revenue growth to improve in the second half of 2026. New SASE and SD-WAN services can add to Fortinet’s recurring service revenues as customers expand their deployments. With strong SASE demand, AI-driven security needs and growing adoption of sovereign SASE, the SASE Firewall could become an important driver of Fortinet’s product and service revenue growth.
How do Earnings Estimates Compare for NET & FTNT?
The Zacks Consensus Estimate for NET’s 2026 and 2027 EPS is pinned at $1.26 and $1.72, respectively. The estimates for fiscal 2026 and 2027 have remained unchanged over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FTNT’s 2026 and 2027 EPS is pegged at $3.45 and $3.85, respectively. The estimates for 2026 and 2027 have both been revised up by 3 cents over the past 30 days.
Image Source: Zacks Investment Research
NET vs. FTNT: Price Performance and Valuation
Year to date, shares of NET and FTNT have surged 76.6% and 140.2%, respectively.
NET Vs. FTNT: YTD Price Return Performance
Image Source: Zacks Investment Research
Currently, FTNT is trading at a forward sales multiple of 15.77X, significantly lower than NET’s forward sales multiple of 34.93X. FTNT’s reasonable valuation makes it more attractive for investors looking for value and stability.
NET vs. FTNT: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: Buy FTNT, Sell NET Right Now
Both Cloudflare and Fortinet are key players in the cybersecurity space. However, Cloudflare’s gross margins remain under pressure as higher paid traffic and AI workload usage increase infrastructure costs. In contrast, Fortinet shows steadier execution, with strong adoption of FortiSASE, Unified SASE and sovereign SASE. Further, FTNT’s reasonable valuation offers some downside protection as well, making the stock an attractive buy, particularly for investors seeking exposure to cybersecurity growth at a fair price.
Currently, Fortinet carries a Zacks Rank #2 (Buy), making the stock a stronger pick over Cloudflare, which has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.