Microsoft grows faster and earns wider margins than Fortinet yet trades at a fraction of its valuation, according to a Trefis comparison of the two AI-software names. Fortinet’s stock has more than doubled in three months, but the analysis argues the cheaper giant is the cleaner bet.
Microsoft looks like the smarter way to own AI-driven software demand than Fortinet, even though Fortinet’s stock has run far harder, a Trefis comparison argues. Fortinet returned over 100% in the last three months while Microsoft stayed relatively flat. Yet the higher-flying stock is the slower-growing and more expensive of the two.
Growth and margins favor Microsoft
Microsoft grows revenue faster, at 17.9% over the last twelve months versus 15.7% for Fortinet. It also runs an operating margin of 47% against Fortinet’s 31%, a wide gap in profit margin.
Despite that edge, Microsoft is the cheaper stock. It trades at a price-to-operating-income multiple of 18.5, while Fortinet sits at 48.7. An investor in Fortinet is paying nearly three times more for each dollar of operating income than one would for the larger, faster-growing peer.
Where the AI demand shows up
Both companies benefit from the AI buildout, but at different scales. Fortinet’s management sees AI as a tailwind, pointing to new AI data-center wins and billings growth of over 70% in its operational-technology security business.
Microsoft is capturing the demand at far greater scale. Its AI business has surpassed a $37 billion ARR, up 123%, and its Copilot line now counts over 20 million Microsoft 365 Copilot paid seats. Microsoft’s 1.6 billion monthly active Windows devices give it a captive base to upsell those services.
The forward signals and the risk
On explicit forward signals, Fortinet has the edge. Citing strong results and confidence in the business, its management raised full-year 2026 guidance for billings, revenue, and service revenue. Microsoft issued no formal guidance change, though its CFO projected continued strength, saying, according to Trefis: “we expect another year of double-digit revenue and operating income growth in FY ’27.”
The risk attached to Microsoft is its spending. The company expects to invest roughly $190 billion in capital expenditures in calendar year 2026. Fortinet’s risk is the opposite: a stretched valuation that already prices in years of flawless execution.
Source: Trefis
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