- Amid growing concerns of an AI bubble, investors are on the hunt for resilient tech gems that offer strong fundamental growth prospects.
- Two standout contenders are Shopify and Fortinet, both of which present robust investment cases driven by solid business models and favorable industry tailwinds.
- For investors seeking tech stocks with strong fundamentals and long-term growth potential, these two names stand out as compelling choices.
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As whispers of an AI bubble grow louder, with tech stocks facing scrutiny over lofty valuations reminiscent of the dot-com era, investors are understandably cautious.
Source: Investing.com
Yet, amid this uncertainty, two tech stalwarts—Shopify (NASDAQ:) and Fortinet (NASDAQ:)—stand out as compelling buys. Their robust fundamentals, strategic positioning, and exposure to durable growth trends make them resilient picks, even if an AI-driven market correction looms.
Here’s why these companies deserve a place in your portfolio and the tailwinds propelling them forward.
1. Shopify
- Year-To-Date Performance: +34.9%
- Market Cap: $186.4 Billion
Shopify, the Canadian e-commerce giant, has cemented itself as a leader in empowering businesses to thrive in the digital economy. While Shopify’s stock has surged nearly 35% year-to-date, outpacing broader markets, its forward price-to-sales ratio of 14.7x and price-to-earnings ratio of 89.5x reflect a premium valuation. However, this premium is justified by Shopify’s relentless growth and adaptability.
Source: Investing.com
Shopify’s international expansion represents a significant growth catalyst that remains underappreciated by many investors. While the company has achieved strong market penetration in North America, enormous opportunities exist in Europe, Asia, and Latin America.
Wall Street’s bullish outlook, with 24 of 32 analysts rating it a Strong Buy, underscores confidence in its long-term potential, even if short-term volatility persists due to market concerns about an AI bubble. Oppenheimer’s recent $180 target underscores confidence that Shopify’s momentum is structural, not cyclical.
Source: InvestingPro
Shopify boasts a “GREAT” Financial Health score of 3.71, reflecting its robust balance sheet and operational resilience. This top-tier rating is backed by strong liquidity and consistent profitability over the last twelve months.
2. Fortinet
- Year-To-Date Performance: -11.9%
- Market Cap: $63.7 Billion
Fortinet, a cybersecurity powerhouse, offers another compelling case for investors seeking stability amid AI bubble fears. The company’s focus on next-generation firewalls, secure access service edge (SASE), and AI-driven security solutions positions it at the heart of a critical and growing industry.
Source: Investing.com
The company’s flagship product, FortiGate, is a highly regarded firewall solution that has driven strong demand across industries. Furthermore, Fortinet’s unified SASE platform, which integrates networking and security, has seen strong momentum, allowing businesses to streamline operations and reduce costs—a competitive edge over rivals like CrowdStrike and Zscaler.
Analysts remain optimistic, with TD Cowen recently raising its price target to $135, citing Fortinet’s energy-efficient firewalls and hyperscale data center demand. Even after a 25% post-earnings pullback in August, analysts view the selloff as an overreaction, with 650,000 firewalls still needing replacement, offering significant cross-selling opportunities.
Source: InvestingPro
Fortinet’s 3.15 Financial Health score and “GREAT” label put it at the top of the tech class, underpinned by a balance sheet with more cash than debt, a robust 233.7% return on equity, and 32.3% EBITDA margin. It has a Fair Value price target of $97.49—about 17% above today’s price of $83.21.
Bottom Line
Shopify and Fortinet represent compelling investments for technology-focused portfolios seeking companies with solid fundamentals independent of AI speculation. Both businesses address large, growing markets with solutions that become more valuable over time through network effects and customer dependency.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), and Invesco S&P 500 Equal Weight ETF (RSP).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
