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# Fortinet's Chip Purchase Commitments Hit $1.93 Billion, With $785 Million Reaching Beyond 2026
- URL: https://www.bullished.co/fortinets-chip-purchase-commitments-hit-1-93-billion-with-785-million-reaching-beyond-2026-d16d158c/
- Published: 2026-10-30T10:12:48.000Z
- Updated: 2026-10-30T10:12:48.000Z
- Description: Inventory rose to $591.2 million and product margin fell 3.3 points as memory-chip costs bit, the quarterly filing shows.
- Author: Matteo Parrino
- Tags: SEC Filings, FTNT, Industry: Technology

[Fortinet](https://www.bullished.co/tag/ftnt/), which sells networking and security products built around its FortiGate firewalls, has locked in [$1.93 billion](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000027/ftnt-20260930.htm?ref=bullished.co) of non-cancelable inventory purchases from contract manufacturers, according to its 10-Q filed Friday. That is up from $1.67 billion a quarter earlier, and the same filing warns that memory-chip costs may outrun the company's price increases.

## A longer tail of commitments

As of September 30, $1,144.5 million of the commitments falls due in 2026 and $785.0 million comes after. The [prior quarter's filing](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000021/ftnt-20260630.htm?ref=bullished.co) put the total at $1.67 billion, with $1,337.5 million in 2026 and $329.6 million thereafter, so the multi-year portion more than doubled.

The 10-Q puts the total $1.12 billion above the $810.6 million at December 31, 2025\. Some of these deals are meant to secure supply and pricing on components for multiple years, and the company says the year-by-year split can shift with actual delivery timing.

Fortinet has set aside $30.3 million for commitments that exceed its demand forecasts, up from $26.7 million at year-end. Management says it believes the commitments fit current and expected demand.

## Inventory swells as margin slips

Inventory on the balance sheet stood at $591.2 million, against $426.3 million at June 30 and $399.5 million at December 31\. Finished goods account for $464.3 million of it.

Product gross margin fell 3.3 percentage points in the third quarter to 64.4%, from 67.7% a year earlier. The filing blames higher memory-chip costs and inventory reserve expense, partly offset by price increases. The company says an AI-driven global shortage of memory chips is constraining supply, and that its price increases may not be sufficient or timely, and could dampen demand.

## Demand is still running hot

Revenue rose 20% to [$2.08 billion](https://www.benzinga.com/analyst-stock-ratings/price-target/26/10/62693098/these-analysts-slash-their-forecasts-on-fortinet-after-q3-results?ref=bullished.co) in the quarter, and product revenue climbed 37% to $765.0 million. The 10-Q credits higher average selling prices, demand for higher-performance products, recent pricing actions and more units shipped. Fortinet expects product revenue to keep growing through the rest of 2026.

Operating margin widened to 33.9% from 31.7%. Fortinet raised its 2026 revenue guidance in its [earnings release](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000024/ftntq3-2026ex991.htm?ref=bullished.co) on Wednesday, and the filing says full-year product gross margin may decline from 2025 on continued higher hardware component costs.

## Cash, buybacks and a Tokyo property

Cash and investments totaled $5.32 billion. In October the board added $1.23 billion to the buyback authorization, and about $2.0 billion remained as of October 29\. The company also signed a deal that month to buy about 204,000 square feet of Tokyo real estate for $136.8 million in cash.

The filing says Fortinet expects enough liquidity to cover its supply obligations, capital spending and repurchases.

The 10-Q shows the price of securing chips is a bet that product demand holds up: $1.93 billion is committed, and the company's own filing says it may have to pay for components regardless of its sales in a given period.

### Sources

- [10-Q Filing — Fortinet (FTNT)](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000027/ftnt-20260930.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — Fortinet (FTNT), Q2 FY2026 filed 2026-07-30 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000021/ftnt-20260630.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, ftntq3-2026ex991.htm) — Fortinet, filed 2026-10-28](https://www.sec.gov/Archives/edgar/data/0001262039/000126203926000024/ftntq3-2026ex991.htm?ref=bullished.co) — SEC EDGAR
- [Fortinet Q3 Earnings & Revenues Beat Estimates, Increase Y/Y](https://finance.yahoo.com/markets/stocks/articles/fortinet-q3-earnings-revenues-beat-144300876.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Fortinet stock slumps after earnings, and other early market movers](https://www.marketwatch.com/livecoverage/stock-market-today-s-p-500-nasdaq-dow-alphabet-earnings-results-amazon-intel/card/fortinet-stock-slumps-after-earnings-and-other-early-market-movers-ofrdfmNAftTp66PoXeg4?ref=bullished.co) — MarketWatch
- [These Analysts Slash Their Forecasts On Fortinet After Q3 Results](https://www.benzinga.com/analyst-stock-ratings/price-target/26/10/62693098/these-analysts-slash-their-forecasts-on-fortinet-after-q3-results?ref=bullished.co) — benzinga.com
- [Fortinet: Q3 Earnings Snapshot – WTOP News](https://wtop.com/national/2026/10/fortinet-q3-earnings-snapshot/?ref=bullished.co) — wtop.com
- [Fortinet (FTNT) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates](https://finance.yahoo.com/markets/stocks/articles/fortinet-ftnt-q3-earnings-taking-210002214.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance

### More on Fortinet

- [Fortinet Stock Plunges 22%, Wiping Out $28 Billion, After Services Revenue Forecast Cut](https://www.bullished.co/fortinet-stock-plunges-22-wiping-out-28-billion-after-services-revenue-forecast-cut-9a74336e/)
- [Fortinet CEO Says Pricing Has 'Stabilized, But Not Improved' As Inventory Cushion Fades](https://www.bullished.co/fortinet-ceo-says-pricing-has-stabilized-but-not-improved-as-inventory-cushion-fades-f14ed78d/)
- [Fortinet CFO Calls Services Lag 'Really A Timing Issue' As Revenue Grows 13% To $1.31 Billion](https://www.bullished.co/fortinet-cfo-calls-services-lag-really-a-timing-issue-as-revenue-grows-13-to-1-31-billion-a585f761/)

[All Fortinet (FTNT) coverage →](https://www.bullished.co/tag/ftnt/)