Cisco Faces Growing Competition from Palo Alto and Fortinet

Cisco Systems is expanding its Secure AI Factory strategy to stay competitive in the market. However, this expansion comes with challenges from other companies like Palo Alto and Fortinet.

Palo Alto's AI-focused platformization strategy poses a significant threat to Cisco's plans. Its Prisma AIRS platform secures AI models, applications, and agents from development through runtime, while XSIAM provides automated security operations and Cortex Cloud strengthens cloud protection. Palo Alto has seen success with its next-generation firewall bookings increasing nearly 40% year over year amid early AI data-center deployments.

Fortinet is also a major competitor, combining high-performance network security, SASE, and AI-driven security operations on a unified FortiOS platform. Its SASE Firewall business grew 34% to more than $2 billion in the second quarter of 2026, while secure networking billings also increased 34%. Fortinet's strong price-performance and local security enforcement capabilities make it a potential rival to Cisco for enterprises and cloud providers building secure AI infrastructure.

Cisco shares have appreciated 44.2% year to date, outperforming the broader Zacks Computer and Technology sector's rise of 15.4%. The company is trading at a premium with a forward 12-month price/earnings ratio of 22.73X compared to the sector's 20.83X.