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Neither Fortinet nor Palo Alto Networks is an automatic winner for every investor. Fortinet’s latest reported quarter showed strong product and billings growth alongside high GAAP profitability; Palo Alto Networks reported faster revenue growth and rapid growth in next-generation security annual recurring revenue (NGS ARR), but its latest quarter also recorded a GAAP net loss. The choice depends on the price you pay, your investment horizon and risk tolerance, and how much cybersecurity exposure your portfolio already has.
What each company’s latest results show
The reporting periods are not aligned: Fortinet’s Q2 FY2026 ended June 30, 2026, while Palo Alto Networks’ Q4 and FY2026 ended July 31, 2026. Their reported growth measures also capture different things, so compare them as operating signals rather than equivalent metrics.
Fortinet: secure networking and product momentum
Fortinet describes its Security Fabric as spanning secure networking, unified Secure Access Service Edge (SASE), and AI-driven security operations (SecOps). Its FY2025 filing reported $6.80 billion in revenue, $2.08 billion in operating income, a 30.7% operating margin, and $2.21 billion in free cash flow. Fortinet’s FY2025 filing also discusses risks tied to investment, costs, supply, demand, and competition.
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Repair Windows errors before they cause bigger problemsFix Now →Scan for outdated or missing drivers - takes under a minuteDriver Scan →In Q2 FY2026, Fortinet reported $2.05 billion in revenue, up 26% year over year; product revenue of $773 million, up 52%; and billings of $2.37 billion, up 33%. GAAP operating margin was 34%, compared with 38% non-GAAP; GAAP diluted EPS was $0.82, compared with $0.90 non-GAAP. Operating cash flow was $1.04 billion and free cash flow was $966 million. These figures are for the quarter ended June 30, 2026. Fortinet’s Q2 FY2026 release provides the results and definitions.
#1 Best Overall
Fortinet’s July 2026 FY2026 outlook projected revenue of $8.020 billion to $8.180 billion, billings of $9.350 billion to $9.550 billion, non-GAAP operating margin of 35% to 37%, and non-GAAP diluted EPS of $3.41 to $3.47. These are guidance, not achieved results. The company says its non-GAAP outlook excludes stock-based compensation, acquired intangible amortization, intellectual-property-related gains, and tax adjustments; it did not reconcile the forward measures to GAAP because some items could not be reasonably predicted.
Palo Alto Networks: faster growth, with a wider GAAP adjustment gap
Palo Alto Networks reports across Network, Cloud, Security Operations, AI, and Identity, including its Network & AI Security, Cortex, and Idira platforms. For FY2026, revenue was $11.480 billion, versus $9.221 billion in FY2025. GAAP operating income was $695 million and GAAP net income was $307 million, down from $1.243 billion and $1.134 billion, respectively, in FY2025. The company reported FY2026 adjusted free cash flow of $4.414 billion, a 38.4% adjusted free cash flow margin. Palo Alto Networks’ FY2026 release includes the full-year figures and its non-GAAP reconciliation.
For Q4 FY2026, revenue was $3.41 billion, up 34% year over year. NGS ARR was $9.10 billion, up 63%, and remaining performance obligations (RPO) were $21.2 billion, up 34%. These measures point to growth in current revenue, annualized subscription business, and contracted obligations, respectively; they are not interchangeable. Q4 GAAP operating income was $172 million versus $1.0 billion non-GAAP operating income, and GAAP net loss was $282 million.
The adjustment gap warrants attention. Palo Alto’s full-year reconciliation added back $1.712 billion in share-based compensation-related charges, $295 million in acquisition-related costs, and $638 million in acquired-intangible amortization when calculating non-GAAP operating income. Those adjustments do not invalidate the company’s growth or cash-flow figures, but investors comparing profitability should inspect GAAP results and the reconciliation alongside adjusted margins. The company cautions that its non-GAAP measures exclude recurring items such as stock-based compensation and may not be directly comparable with peers’ similarly named measures. The release’s reconciliation and risk disclosures provide further context.
Rank #3
Palo Alto’s FY2027 guidance, issued September 1, 2026, projected revenue of $14.10 billion to $14.20 billion, NGS ARR of $11.075 billion to $11.175 billion, a 29.5% non-GAAP operating margin, and a 38.0% adjusted free cash flow margin. These are forward estimates, not results. The company’s non-GAAP guidance excludes share-based compensation, acquisition costs, acquired-intangible amortization, litigation, and other adjustments; management did not reconcile those forward measures to GAAP.
How the October 2 valuation snapshot compares
At the October 2, 2026 market close, Stock Analysis reported the following share prices, market capitalizations, and forward price-to-earnings (P/E) ratios:
| Company | Closing price (Oct. 2, 2026) | Market capitalization | Forward P/E |
|---|---|---|---|
| Fortinet (FTNT) | $180.95 | $132.77 billion | 51.56 |
| Palo Alto Networks (PANW) | $403.24 | $329.85 billion | 96.26 |
On that provider’s snapshot, Palo Alto Networks carried the higher forward earnings multiple. The ratios depend on estimates and share prices, may differ across data providers, and can change; they are not forecasts of investment returns. A forward P/E also inherits the companies’ different approaches to non-GAAP guidance, so it should not be treated as a complete measure of relative value. Stock Analysis’ FTNT statistics and PANW statistics are the cited snapshots.
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Which stock may fit which investment case?
Fortinet may merit closer review if you prioritize
- Secure-networking exposure and hardware-linked product demand, reflected in its Q2 product-revenue growth.
- Strong reported GAAP operating margin and quarterly free cash flow alongside growth.
- A lower forward P/E than Palo Alto Networks in the cited October 2 snapshot, while recognizing that this alone does not establish undervaluation.
Fortinet’s own filing notes that investment in sales and marketing, product development, and data-center capacity may compress near-term operating margins. It also identifies possible exposure to component costs, tariffs, supply-chain disruption, changing customer demand, competition, and longer enterprise sales cycles.
Best Value
Palo Alto Networks may merit closer review if you prioritize
- Faster latest-quarter revenue growth and rapid NGS ARR growth, while distinguishing both from Fortinet’s billings and product-revenue measures.
- Scale across its network, cloud, security operations, AI, and identity offerings.
- Its reported adjusted free cash flow margin, considered alongside GAAP earnings and the substantial adjustments in its non-GAAP reconciliation.
Palo Alto’s FY2026 release identifies risks that include competition, customer vendor-consolidation behavior, revenue-recognition timing, usage optimization, product vulnerabilities and security incidents, acquisitions, AI developments, third-party dependencies, dilution, and execution.
Quick Recap
A practical comparison before investing
- Choose the measures that match the business question. For Fortinet, examine product revenue and billings as well as revenue. For Palo Alto, examine NGS ARR and RPO as well as revenue. Do not compare those measures as though they mean the same thing.
- Check GAAP results before relying on adjusted margins. Review operating income, net income, and cash flow, then read each company’s reconciliation. Treat Fortinet’s non-GAAP forward outlook and Palo Alto’s adjusted guidance as company-defined measures.
- Assess execution risks relevant to your thesis. Consider Fortinet’s investment, component, tariff, and supply exposures alongside Palo Alto’s acquisition, product, usage, and dilution risks. Both face competition.
- Refresh valuation data at the time you decide. The October 2, 2026 figures are a dated snapshot, not a current quote or a return forecast. Compare the estimate basis and price paid rather than treating one multiple as a decision rule.
- Account for your portfolio. Your horizon, capacity for volatility, cybersecurity concentration, and investment objectives determine whether either company belongs in your portfolio; company results alone cannot establish personal suitability.
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