A technical look at Wall Street's 'fear gauge' and how to hedge against potential volatility
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Forbes
19 minutes ago
- Forbes
Fortinet: Is The Fall In FTNT Stock Warranted?
Following an earnings report that surpassed analyst forecasts, Fortinet (NASDAQ:FTNT) stock fell 17% in after-hours trading. Although the company's third-quarter revenue guidance was marginally lower than expected, the drastic sell-off appears excessive. Nevertheless, considering that Fortinet's stock has been trading at a premium valuation, the absence of improved growth likely unsettled investors. This prompts the question: Is this stock worth buying now that it has dropped to approximately $80 per share? We believe it is. Our assessment derives from a thorough analysis of Fortinet's valuation, contrasting its current condition with its historical financial performance and operational metrics. This examination, which emphasizes crucial factors such as Growth, Profitability, Financial Stability, and Downturn Resilience, suggests that the company maintains a very robust financial and operational standing. However, if you are aiming for upside with lower volatility than individual stocks, the Trefis High Quality portfolio offers an alternative — it has outperformed the S&P 500 and delivered returns surpassing 91% since its inception. Additionally, see – What's Happening With JOBY Stock? What Does Fortinet's Valuation Look Like in Comparison to The S&P 500? Measured by the price you pay per dollar of sales or profit, FTNT stock appears costly relative to the broader market. How Have Fortinet's Revenues Expanded Over Recent Years? Fortinet's Revenues have experienced significant growth in recent years. How Profitable Is Fortinet? Fortinet's profit margins are significantly higher than those of most companies within the Trefis coverage universe. Is Fortinet Financially Stable? Fortinet's balance sheet appears very robust. How Resilient Is FTNT Stock in a Downturn? FTNT stock has shown more resilience compared to the benchmark S&P 500 index during several recent downturns. As investors hope for a soft landing of the U.S. economy, what could happen if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash illustrates how key stocks performed during and after the last six market crashes. Integrating All Factors: Implications for FTNT Stock In conclusion, Fortinet's performance across the outlined parameters is summarized as follows: Fortinet has consistently excelled across essential financial metrics. While its valuation multiple is presently above that of the wider market index, this is typical for cybersecurity firms. For comparison, competitors such as Palo Alto Networks, CrowdStrike, and Zscaler trade at 12x, 27x, and 17x revenue respectively. Fortinet's own average price-to-sales ratio over the past four years has been 12x. We believe that the recent decline in Fortinet's stock offers a compelling opportunity for long-term investors. Of course, we might be mistaken in our evaluation. While it is possible that the market is reducing the company's valuation multiple due to slowing revenue growth, Fortinet's robust fundamentals and operational performance indicate otherwise. Considering the current valuation gap from its historical average, we forecast strong gains for investors with a three- to five-year investment time frame. While FTNT stock may reach higher levels, consider the Trefis Reinforced Value (RV) Portfolio, which has surpassed its all-cap stocks benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to yield strong returns for investors. What accounts for this? The quarterly rebalanced collection of large-, mid-, and small-cap RV Portfolio stocks has provided a responsive strategy to capitalize on favorable market conditions while minimizing losses when markets decline, as detailed in RV Portfolio performance metrics.
Yahoo
32 minutes ago
- Yahoo
Prediction: 1 Artificial Intelligence (AI) Stock to Buy Before It Soars 10X in the Next Decade
Key Points Only 23 companies in the S&P 500 achieved 10x returns in the last decade, but Upstart could make the cut in the next 10 years. Upstart uses artificial intelligence to help banks assess the creditworthiness of potential borrowers and make better lending decisions. Wall Street expects Upstart's adjusted earnings to grow at 66% annually through 2027, which makes the current valuation look reasonable. These 10 stocks could mint the next wave of millionaires › A stock must increase 900% to generate a 10x return. Only 23 companies in the S&P 500 (SNPINDEX: ^GSPC) accomplished that during the last decade. But Upstart Holdings (NASDAQ: UPST) more than tripled in value in the last year, and I think it could be a 10x investment over the next decade. Here's what that implies for shareholders: Upstart currently trades at $79 per share and has a market value of $7.5 billion. The stock must increase 900% to $790 per share to achieve a 10x return. That would bring its market value to $750 billion. Here's what investors should know about Upstart. Upstart uses artificial intelligence to help banks lend money Upstart operates an artificial intelligence (AI) lending platform built to improve access to affordable credit for consumers, while reducing costs for banking partners. Most lenders make credit decisions with simple rules-based systems that incorporate a limited number of variables. But Upstart uses sophisticated machine learning models informed by 2,500+ variables to determine whether borrowers are creditworthy. Internal studies have show banks on Upstart's AI platform can approve more borrowers at lower interest rates without an increase in defaults. Alternatively, banks can reduce defaults while approving the same number of borrowers. Either way, lenders benefit from improved profitability. The average Upstart loan originated in the last two years is on track to outperform the two-year Treasury yield by 7.1 percentage points. Importantly, Upstart says it has a "significant competitive advantage" in that the machine learning models supporting its platform benefit from a network effect, which makes the decisioning engine more accurate each time a borrower makes or misses a payment. The number of data points used to train those models has increase over fourfold since 2022. Upstart looked strong in the second quarter Upstart reported encouraging second-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 102% to $257 million and non-GAAP net income was $0.36 per diluted share, up from a loss of $0.17 per diluted share in the same quarter last year. The company also raised its full-year guidance, such that revenue is projected to increase 65% in 2025. Management provided important context on the earnings call. First, new products (home equity lines of credit and auto loans) accounted for over 10% of total originations for the first time. Second, loan volume held on the company's balance sheet jumped 25% to $1 billion, but most of those loans are considered R&D expenses, meaning the company uses them to test and evaluate AI models. Importantly, CFO Sanjay Datta says increased loan volume on the balance is a temporary situation. "We have already begun the process of securing external capital to support these initiatives, and we believe these efforts will allow us to transition away from direct balance sheet funding of these in the near-term." Why Upstart could be a 10x investment over the next 10 years Upstart currently trades at 90 times adjusted earnings, which sounds expensive without more information. But Wall Street estimates the company's adjusted earnings will increase at 66% annually through 2027, a sensible estimate given its total addressable market exceeds $3 trillion in loan origination volume. For context, loans originated on Upstart's AI platform totaled $8.6 billion over the last four quarters, meaning the company has captured less than 1% of its addressable market. That leaves room for earnings to grow at 40% annually over the next decade. And in that scenario, Upstart stock could advance 900% while its price-to-earnings multiple dropped to a more reasonable 32. Importantly, investors should bear in mind that (1) my prediction is rather aggressive and (2) predicting what might happen over a 10-year period is virtually impossible. But I think Upstart is likely to beat the market over the next decade even if the stock does not increase 10 times in value. Patient investors that can tolerate volatility should feel comfortable buying a small position today. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $462,306!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,522!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $619,036!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of August 4, 2025 Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy. Prediction: 1 Artificial Intelligence (AI) Stock to Buy Before It Soars 10X in the Next Decade was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
32 minutes ago
- Yahoo
The stunning numbers behind Palantir's monster rally in 2025 — and the billions it's minting for top execs
Palantir dropped a blockbuster earnings report for the second quarter on Monday. The AI-powered software firm reported $1 billion in revenue for the first time. The stock surged as much as 10%, extending its run as the best-performing stock in the S&P 500 this year. Palantir stock popped to fresh records on Tuesday after a blockbuster quarterly report revealed revenue topped $1 billion for the first time. Here are the latest numbers that illustrate its monster year so far in 2025. Year-to-date gain Palantir is on top for the second year in a row. After ending 2024 with a gain of 340%, the stock is up 130% in 2025 and is the best-performing name in the S&P 500 year-to-date by a fairly wide margin. The second-best performer, GE Vernova, is up about 100%. Gains for Palantir earlier in the year were driven by a combo of lucrative deals with the government, endless enthusiasm for the AI trade, and a retail-trader base that's been exuberant about the stock recently. Palantir was the most-traded stock among investors on Fidelity on Tuesday, with volume up about 8%. Mentions of the company also surged on investing forums across Reddit, up 375% in the last 24 hours, according to sentiment tracker Ape Wisdom. CEO Alex Karp has leaned into the enthusiasm from retail, welcoming calls from individual traders and often shouting them out for their support during earnings calls. Revenue growth Palantir's Q2 earnings report revealed revenue topped $1 billion for the first time ever, marking a 48% year-over-year increase. US revenue surged 60% year-over-year and 17% quarter-over-quarter, reaching $733 million. The company also set records for total contract value and US commercial contract value, which grew 140% and 222% year-over-year respectively. "We are guiding to the highest sequential quarterly revenue growth in our company's history, representing 50% year-over-year growth," Karp said on the call. In his letter to Palantir shareholders, Karp said that the company's critics have been "defanged and bent into a kind of submission." Eye-popping valuation The jump on Tuesday also stretches what analysts have said is an already extreme valuation. At Tuesday's price, Palantir stock trades at a trailing 12-month price-to-earnings ratio of nearly 800x, which Wall Street pros say will need to be justified with continued stellar growth in the coming quarters. Analysts warn that even a slight miss threatens to spark a sharp correction in the stock. Its colossal valuation was the one big reason analysts held back on more bullish assessments of the stock, even as Wall Street was optimistic heading into the latest earnings report. Goldman Sachs, UBS, and Mizuho are among the Wall Street banks that maintained a "neutral" rating on Palantir, while analysts at Citi, rated the stock as "Neutral/High Risk." "We are equally stunned by the multiple that PLTR has attained, which places its valuation dramatically above anything else in software," Mizuho analysts said ahead of the report, adding they "continue to worry" that the stock could see a reversion sometime in the next several quarters. "We continue to be very impressed by the fundamental story (we have been since our launch) but valuation remains our key hurdle, we remain Neutral rated," UBS analysts wrote. Billionaire bonanza The dizzying climb in the stock price has boosted the fortunes of founders and insiders to new heights. Alex Karp's net worth has about doubled this year to $14.3 billion, according to the Bloomberg Billionaires Index. The rally has also pushed CTO Shyam Sankar into the billionaire's club for the first time. Other insiders whose wealth has soared into the billions include President Stephen Cohen and co-founder Joe Lonsdale, who left Palantir in 2009. Peter Thiel, who co-founded the company, has seen his net worth surge to 24 billion this year, partly due to Palantir's huge gain. Read the original article on Business Insider
