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CEO Ken Xie Says AI Infrastructure Expansion and New Threats Are Fueling Demand
Michael Novinson (MichaelNovinson) ,
Tiffany Wang •
October 28, 2026
Ken Xie, founder, chairman of the board and CEO, Fortinet (Image: Fortinet)
The artificial intelligence-driven cybersecurity spending cycle is bigger than previous booms following the COVID-19 pandemic and the Target data breach, said Fortinet CEO Ken Xie.See Also: SECUREIQLAB REPORT: 99.07% Vault vs. 64.55% Screen Door
The demand for securing AI has stayed strong in recent months with no signs of slowing, Xie told investors Wednesday. The current cycle is fueled by the double-sided coin of infrastructure expansion and growing concerns over threats, he said.
The optimism comes amid growing fears of an AI stock market bubble as investors question whether mounting debt will translate into profits and pulled back from technology stocks in mid-October. Meanwhile, the cybersecurity industry is grappling with a widespread threat involving decade-old PHP vulnerabilities, discovered by researchers using AI.
“This AI threat seems a lot more durable and sustainable than some of those earlier kind of threat drivers,” namely the switch to working remotely and the retail supply chain compromise, Chief Operating Officer John Whittle added. “It feels like early days.”
Chief Financial Officer Christiane Ohlgart said the network is a key battlefield in safeguarding AI workflows across the cloud and on-premises, and Fortinet’s expertise earned the company a seven-figure deal with an AI company developing frontier models. The AI maker used Fortinet firewalls in its first AI data center last year and returned this year to adopt the same product across five additional data centers, Ohlgart said.
“This fast-changing threat environment has turned high-performance security into a structural necessity,” she said. “Because enterprises and governments are highly aware of AI-powered attack vectors and expanding regulatory oversight, they are directing investments towards SASE firewalls that can defend complex, decentralized environments.”
Growing enterprise adoption of open-source and open-weight models creates additional demand for high-speed network security deployment, Xie said, particularly when it comes to internal segmentation within data centers. “That also drives some demand for how to monitor and manage all these AI models in the enterprise,” he said.
All the different fronts will end up driving hardware purchases and recurring revenue from security updates, Xie said.
Some verticals such as retail may delay replacing existing hardware and stretch lower-end products, Xie said, “but they also start to realize it is a new threat environment, and there is a lot of attack or vulnerability exposed by the AI.”
“If you’re keeping the hardware like five, seven, 10 years longer, a lot of function kind of difficult to run or we no longer support some of the new function there. That’s where we don’t feel this stretching will be a trend going forward,” he said.
Fortinet Stock Plummets Amid Soft Sales Outlook
Category
Q3 2026
Q3 2025
% Change
Total Revenue
$2.08B
$1.72B
20.5%
Service Revenue
$1.31B
$1.17B
12.7%
Product Revenue
$765M
$559.3M
36.8%
Net Income
$635.5M
$473.9M
34.1%
Earnings Per Diluted Share
$0.86
$0.62
38.7%
Non-GAAP Net Income
$678.6M
$561M
21%
Non-GAAP Earnings Per Share
$0.91
$0.74
23%
Source: Fortinet
Fortinet’s revenue of $2.08 billion in the quarter Oct. 31 edged out Seeking Alpha’s sales estimate of $2.06 billion. Meanwhile, the company’s non-GAAP earnings of $0.91 per share beat Seeking Alpha’s non-GAAP estimate of $0.86 per share.
The company’s stock is down $44.75 – 25.71% – to $129.33 per share in after-hours trading Wednesday. That’s the lowest Fortinet’s stock has traded since May 27, 2026.
For the quarter ending Dec. 31, Fortinet expects diluted non-GAAP net income of $0.93 to $0.95 per share on revenue of between $2.155 billion and $2.245 billion. Analysts had been expecting non-GAAP net income of $0.88 per share on sales of $2.16 billion, according to Seeking Alpha.
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