Fortinet Sees AI Data Centers, OT Security and Sovereign SASE Fueling Pipeline

Key Points

• Fortinet says its pipeline is strengthening as demand grows for AI-related data center security, OT security, and sovereign SASE, with firewall sales still supported by broader product demand.
• Executives said the AI opportunity is likely to be a steady, long-term rollout rather than a one-quarter spike, driven by both new AI data centers and enterprises shifting workloads on-premises for cost and data sovereignty reasons.
• Fortinet also highlighted continued firewall growth tied to OT, SD-WAN and SASE bundling, while noting supply-chain management and inventory availability remain important as demand rises.

Fortinet NASDAQ: FTNT executives said demand for AI-related data center security, operational technology protection and sovereign SASE offerings is contributing to a stronger pipeline, while the company continues to see product growth supported by firewall demand.

Speaking at a J.P. Morgan-hosted software event, CFO Christiane Ohlgart and Robert May, executive vice president of technology and product management, described AI as a broad opportunity for Fortinet, extending beyond data centers to enterprise security needs created by AI adoption.

Ohlgart said companies are evaluating whether to bring certain AI models into their own data centers as they assess the longer-term cost of using AI in the cloud. She said Fortinet is seeing more AI data center buildouts coming online, but characterized the opportunity as one that is likely to unfold over time rather than in a single large quarter.

“For us it’s not about one big quarter with AI data centers, but it’s going to be a consistent deployment as more companies start to look at how do they deploy AI and as other enterprises ramp up,” Ohlgart said.

AI Data Centers Highlight Fortinet’s Power Efficiency Pitch

May said AI data center demand is coming from both existing data centers that are being repurposed or expanded and from new deployments. He said Fortinet’s history in data centers has been supported by its ASIC technology, citing “high performance, the low latency, the low power consumption” as attributes that are increasingly relevant in the AI era.

Ohlgart said about one-third of Fortinet’s firewall revenue comes from large firewalls, with another third from medium-sized firewalls and the remaining third from smaller firewalls. She said financial services and public sector customers often have larger data centers and that Fortinet’s low power consumption is an advantage for AI infrastructure, which consumes significant amounts of power.

May added that power consumption is becoming a more prominent factor in purchasing decisions. He also pointed to the ability to run the same operating system in virtual environments, including on NVIDIA BlueField DPUs, as a benefit for data center operators that want a single security management approach across environments.

Executives Point to On-Premises AI and Data Sovereignty Trends

May said companies may start AI projects in public cloud environments but can later see cost advantages in running their own AI infrastructure, particularly as usage scales. He also cited data sovereignty requirements as a recurring customer concern across AI, SASE and other technologies.

Ohlgart said Fortinet’s global footprint could be an advantage, particularly in EMEA, where she said data sovereignty rules are creating greater concern about where data resides. “It is a global opportunity,” she said of AI-related deployments.

The executives contrasted the current environment with the COVID-era spending cycle, when the main driver was the sudden need to support large numbers of remote users. May said the current drivers are different, with customers focused on AI infrastructure, security needs and data location.

Firewall Demand Supported by OT, AI and SD-WAN

Ohlgart said Fortinet is seeing multiple use cases for firewalls, including AI, operational technology and SD-WAN. She said OT has been a growth area for Fortinet for a long time and has continued to grow faster than the overall business in recent quarters.

She pointed to recent high-profile attacks and disruptions involving production, retail operations and airport terminals as factors raising awareness of the damage caused by OT attacks. “Companies are spending more money and are looking more into this area for security,” Ohlgart said, adding that OT remains a white space opportunity in many cases.

Ohlgart said she is confident in “continued high growth for firewalls for a significant time,” adding that the trend is not short term.

FortiOS 8.0, AI Security and Service Attach

May discussed FortiOS 8.0, describing the company’s AI strategy in two categories: AI for security and security for AI. He said AI for security includes usability improvements, automation, agents and assistants that can help with deployment, troubleshooting and operations. Ohlgart added mitigation as another area of use.

On the security-for-AI side, May said FortiOS 8.0 addresses “shadow AI,” helping companies identify AI services and agents being used in their networks and control related traffic. He said many of those capabilities include a service component layered on top, which can support service attach rates.

Asked about AI models identifying vulnerabilities, May said Fortinet has focused for several years on communicating with customers and keeping them updated on the latest versions. Ohlgart said Fortinet has been focused on improving code quality and has programs in place to work with customers on upgrades. She said hardware replacement is typically required only for very old equipment, with operating system or application software upgrades usually being the first step.

SASE, Supply Chain and Pipeline Visibility

Ohlgart said Fortinet’s pipeline is “improving significantly,” with security spending being prioritized as AI creates additional security needs and geopolitical tensions increase concerns around nation-state activity and attacks on critical infrastructure.

May said Fortinet’s sovereign SASE offering allows customers to choose from public locations, restrict data centers to specific countries or augment deployments with FortiGate appliances in specific locations. He said early customers for on-premises sovereignty needs include telecom providers and large financial institutions.

Ohlgart said service providers are interested in sovereign SASE because reselling third-party solutions can make them replaceable, while owning a sovereign SASE offering helps them maintain customer relationships. She also said service providers that host public sector applications are responding to stronger sovereignty requirements, particularly in Europe.

The executives also discussed Fortinet’s SD-WAN and SASE bundling. May said early reception has shown “large attraction” and that a SASE starter pack can make SD-WAN deployments smoother. Ohlgart said the bundle helps customers see how easy it is to deploy SASE after using SD-WAN, potentially creating upsell opportunities or displacing competitors and VPN solutions.

On supply chain, Ohlgart said Fortinet has historically maintained about two quarters of inventory on hand and continues to do so. She said the company is working to accelerate production for the rest of the year amid higher demand and noted that the industry is affected by increases in memory chip components. Fortinet’s direct relationships with memory vendors, in addition to contract manufacturers, are being used actively, she said.

Ohlgart said Fortinet now has inventory in Europe, Taiwan and the U.S. after buying a warehouse in Europe last year, improving warehouse capacity and risk management. She said the company’s visibility is typically strongest two quarters out, while the pipeline has supported confidence in its outlook following the first quarter.

About Fortinet NASDAQ: FTNT

Fortinet, Inc NASDAQ: FTNT is a multinational cybersecurity company that develops and delivers integrated security solutions for enterprise, service provider and government customers worldwide. Founded in 2000 and headquartered in Sunnyvale, California, the company was co‑founded by Ken Xie and Michael Xie. Ken Xie serves as chairman and chief executive officer, and the company operates through a global sales, channel and services organization to support customers across the Americas, EMEA and Asia‑Pacific.

Fortinet's product portfolio centers on network security appliances and software, with its FortiGate next‑generation firewalls and the FortiOS operating system forming a core platform.

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