5 Stocks That Analysts Are Bearish On

1. Fortinet (NASDAQ:FTNT)

Fortinet is a cybersecurity company that is unlikely to lose relevance at a time when cyber attacks are becoming a norm. However, cybersecurity spending is suffering because of the way AI and automation are helping people make their systems more secure.

The fundamental problem with Fortinet is that a significant customer base of the company will reach the end of support by the next year. Analysts believe that this close to expiry, companies depict a certain growth which is lacking at Fortinet. Moreover, the stock ran up over 80% in a matter of 5 months which means whatever limited growth prospects the stock has at this point are most probably priced in.

All’s not lost for investors though as Piper Sandler upgraded the stock to Overweight just last week. The firm’s analysts believe that despite a surge in AI spending, cybersecurity is still a top priority for IT companies, and spending intentions in the sector have improved.

Fortinet is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held FTNT at the end of the third quarter which was 42 in the previous quarter. While we acknowledge the potential of FTNT as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as FTNT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.