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Fortinet fuels cybersecurity stocks with impressive financials after previous setbacks

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TLDR:

Fortinet, a cybersecurity firm, delivered strong fourth-quarter earnings and revenue, boosting the company’s financials and cybersecurity stocks in general. This comes as a relief after Fortinet’s previous outlook misses in November and August 2024. The positive financial results have led to a surge in the stock prices of competitors like Palo Alto Networks, Okta, and Zscaler. There is increasing demand for cybersecurity products and services due to the rise in cyber-attacks targeting U.S. firms.

“They’re back,” says CNBC’s Jim Cramer, referring to Fortinet’s turnaround after a strong quarter. The cybersecurity firm’s stock rose 3.5% following its beat on fourth-quarter earnings and revenue. The billings number was particularly strong, providing investors with confidence in the company’s performance. Fortinet had previously struggled with its outlook, causing a drag on the entire industry. However, this time around, the guidance was positive and, as a result, cybersecurity stocks have seen a boost.

Palo Alto Networks, another competitor in the cybersecurity industry, saw its stock rally by 6.5% and reached a new all-time high. This positive momentum is also reflected in the stock prices of other cybersecurity companies like Okta and Zscaler. Jim Cramer, who holds Palo Alto Networks in his Charitable Portfolio Trust, has a bullish outlook on the company given the high demand for its products.

Cybersecurity has become a major theme in 2024 due to the increasing number of cyber-attacks targeting U.S. firms. Even tech giant Microsoft fell victim to a cyber-attack by a Russian intelligence group in January. As a result, companies like Microsoft, which also has its own growing cybersecurity business, are being closely watched by investors.

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