1 Stock Down 11% to Buy Before Artificial Intelligence (AI) Could Supercharge Its Growth and Send It Soaring

Technology stocks have been in fine form in the past year, which is evident from the 50% gains clocked by the Nasdaq-100 Technology Sector index during this period. But not all tech stocks have benefited from the broader market’s surge. Fortinet (NASDAQ: FTNT) is one of them.

Shares of the cybersecurity company are down 11% in the past year, and the latest quarterly results (for the first quarter of 2024) haven’t helped matters, either. Let’s see why that was so, before taking a closer look at the catalysts that could help Fortinet regain its mojo.

Fortinet investors are worried about its tepid growth

First-quarter revenue increased just 7% year over year to $1.35 billion, while its adjusted net income was up 26% to $0.43 per share. The numbers exceeded Wall Street’s outlook as analysts were expecting Fortinet to deliver $0.38 per share in earnings on revenue of $1.34 billion. The problem, however, was with Fortinet’s billings during the quarter.

Billings fell just over 6% from the year-ago period to $1.41 billion last quarter, missing the $1.43 billion consensus estimate. Management pointed out that “billings drive current and future revenue” and that the metric is “an important indicator of the health and viability of our business.” So, the contraction in the company’s billings doesn’t bode well, and this explains why Fortinet stock fell after the results were released.

Moreover, Fortinet’s guidance for flat billings in 2024 versus the 14% growth it registered last year has further added to the negative investor sentiment. This explains why the company’s top-line growth is expected to slow down remarkably this year. Fortinet’s revenue guidance of $5.8 billion for this year points toward an increase of just 9% from last year. For comparison, the company’s top line jumped 20% in 2023 to $5.3 billion.

In all, it is easy to see why investors have pressed the panic button and the stock has been underperforming. However, there were a few positive takeaways last quarter that could help accelerate growth once again. Let’s take a closer look at them.

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