We recently published a list of 10 Best Performing Cybersecurity Stocks in 2024. In this article, we are going to take a look at where Fortinet Inc. (NASDAQ:FTNT) stands against other best performing cybersecurity stocks in 2024.
Data Breaches to Disruptions
The technology sector has expanded rapidly in recent years, creating an increasingly interconnected digital world. Cybersecurity, a relatively new field, has become critical as the volume of sensitive data stored online has surged. This growth has unfortunately provided more opportunities for cybercriminals to commit financial theft, steal confidential information, and disrupt vital infrastructure. In 2023 alone, data breaches affected over 349 million individuals, highlighting a troubling trend. The Consumer Sentinel Network received a surge in reports, with fraud making up over 2.6 million cases and identity theft surpassing one million. The scale of these threats is substantial; according to McKinsey, damages from cyberattacks could reach approximately $10.5 trillion annually by 2025—a 300% increase from 2015 levels.
A Microsoft Security survey reveals that small and mid-sized businesses (SMBs) face added challenges due to limited resources and expertise in implementing and managing advanced security solutions to detect, prevent, or mitigate cyberattacks. Fewer than one-third of respondents indicated that their SMBs handle security internally; the majority rely on consultants, managed service providers, or cyber insurance guidelines for choosing security tools.
AI Meets Cybercrime
As AI technology advances, data privacy and risk management concerns are escalating for individuals and businesses alike. Although regulators are exploring strategies to foster AI innovation while minimizing potential negative impacts on society, the United States still lacks comprehensive federal legislation addressing AI.
AI is transforming the cybersecurity landscape from both the threat and defense perspectives, creating a long-term growth path. “Cyber threats continue to evolve, and as digital transformation accelerates, so does the potential for cyberattacks,” noted Christopher Gilchrist, principal analyst at Forrester. Earlier this year, The World Economic Forum predicted that AI could push cyber incidents and data breaches to hit record levels in 2024, following a 72% year-over-year rise in breaches in the past year.
Nonetheless, the technology holds transformative potential for security. Palo Alto Networks remarked that 2024 “will be a phenomenal year in the utilization of AI in cybersecurity,” yet predicts even greater advances in the future. For investors, this growth represents an intriguing opportunity. According to Acumen research, the global market for AI-driven cybersecurity products was valued at around $15 billion in 2021, with projections to reach approximately $135 billion by 2030. AI’s ability to analyze vast data sets and detect patterns makes it especially effective for tasks like penetration testing, where systems are deliberately probed for vulnerabilities. By deploying AI tools to assess their own technology, organizations can identify weaknesses proactively—closing gaps before hackers have the chance to exploit them.
The constant evolution of external threats means that cybersecurity must continually adapt to stay ahead of emerging risks, with the top players racing to deliver innovative solutions to remain competitive.
A close-up of a user authenticating into a secure network using a two-factor authentication process.
Our Methodology
To compile our list of the best-performing cybersecurity stocks this year, we reviewed the holdings of various cybersecurity ETFs and sorted them by year-to-date performance, as of November 8, in ascending order. Additionally, we included hedge fund sentiment on each stock to provide further context and insight into each company’s outlook.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Fortinet Inc. (NASDAQ:FTNT)
Year-to-Date Performance as of November 8: 59.29%
Number of Hedge Fund Holders: 42
Fortinet Inc. (NASDAQ:FTNT), a global leader in enterprise cybersecurity and networking, protects over 700,000 organizations worldwide, including enterprises, service providers, and government agencies. Its offerings span network firewalls, intrusion prevention, unified threat management, and advanced threat protection solutions.
Fortinet Inc. (NASDAQ:FTNT) is increasingly leveraging AI to improve its security capabilities. Its AI-driven assistant, FortiAI, now includes new tools to bolster threat detection and streamline incident investigation, including FortiAI for FortiNDR Cloud, designed to assist threat hunters by analyzing and correlating detections for better threat coverage insights, and FortiAI for Lacework FortiCNAPP, which equips security operations teams with enhanced alert clarity, offering guidance for remediation and corrective action through natural language queries. These integrations aim to optimize security analyst workflows and enable faster response to security incidents.
In its recent earnings report, Fortinet Inc. (NASDAQ:FTNT) surpassed analyst expectations for the third quarter. The company posted an adjusted EPS of $0.63, ahead of the $0.52 estimate, while quarterly revenue reached $1.51 billion, exceeding the consensus of $1.48 billion and marking a 13% year-over-year increase. Service revenue, the largest revenue component, rose 19.1% year-over-year to $1.03 billion, while product revenue saw a modest increase of 1.7% to $473.9 million. Fortinet Inc. (NASDAQ:FTNT) also raised its full-year 2024 guidance, now projecting revenue between $5.86 billion and $5.92 billion, aligning with analyst expectations.
Conestoga Capital Advisors stated the following regarding Fortinet, Inc. (NASDAQ:FTNT) in its Q3 2024 investor letter:
“Fortinet, Inc. (NASDAQ:FTNT) is the worldwide market share leader in network security firewalls (by units). During the quarter, FTNT reported a significant beat on billings and saw accelerating bookings growth, indicating the firewall product cycle may have turned positive. The company is also managing inventory well, and operating margins surprised to the upside in the reported quarter. FTNT maintains a healthy outlook for highly profitable growth.”
Overall, FTNT ranks 3rd on our list of best performing cybersecurity stocks in 2024. While we acknowledge the potential of FTNT, our conviction lies in the belief that certain 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 but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.