FORTINET, INC.

Red flags

• Fortinet had $810.6 million of non-cancelable inventory purchase commitments as of December 31, 2025, including $720.9 million due in 2026 and $89.7 million thereafter; excess demand forecasts could require inventory write-downs or additional liabilities.
• The liability for inventory purchase commitments was $26.7 million at December 31, 2025, down from $54.0 million a year earlier, but the company remains exposed to firm commitments if demand weakens.
• Key CPUs, network chips, wireless chips, and memory devices are sourced from limited or sole suppliers, while ASIC foundries operate on purchase orders without guaranteed capacity or pricing.
• Fortinet has no long-term contracts guaranteeing capacity or pricing for its ASICs or other components, increasing exposure to shortages, lead-time extensions, and gross-margin pressure.
• The company disclosed two securities class actions filed in September and October 2025; although litigation accruals were not material at year-end, the financial exposure is unresolved.