Cybersecurity has been one of the more consistent themes in this market. While the S&P 500 is up just over 8% year-to-date, the cybersecurity-focused ETF Amplify (NYSEARCA: HACK) is up more than 16%. As the broader tech space continues to drive leadership, a few big names in the cyber space are starting to set up for potentially significant breakouts after long periods of consolidation.
Two of the most notable setups right now are Fortinet (NASDAQ: FTNT) and Palo Alto Networks (NASDAQ: PANW). Both stocks have underperformed the sector year-to-date, but their multi-month and even multi-year chart structures are starting to tighten meaningfully. With earnings on deck and some added M&A speculation in the mix, these names could soon be on the move.
Fortinet: Tight Range, Big Potential
Fortinet has spent the last few months compressing in a reasonably clean range between $100 and $110. Since April, the stock has held up well above most key mid- to long-term moving averages, forming a potentially bullish coiled base that’s starting to look like a textbook consolidation breakout setup. The longer a stock bases under resistance, the more explosive the move tends to be once that level breaks. And for Fortinet, the breakout area is clearly defined near the $110 zone.
This tightening action is happening just ahead of earnings, scheduled for August 6. That could end up being the catalyst needed to overcome resistance once and for all. Fortinet last reported in early May, posting Q1 2025 earnings of $0.58 per share, beating consensus by $0.05. Revenue rose 13.8% year-over-year. Solid numbers, but not enough at the time to spark a breakout.
Analysts are sitting on the fence, with most holding a neutral stance going into the following report. Valuation remains reasonable relative to the rest of the space, and the chart suggests something big could be brewing.
Palo Alto Networks: Multi-Year Breakout on Watch
Palo Alto’s setup is a bit more stretched out in time, but no less interesting. The stock has been consolidating in a broad sideways range between $180 and $210 for nearly a year now. While that’s a long time to move sideways, the bigger picture still points to strength. PANW has gained 127% over the past three years, and over 500% across the last decade.
YTD performance has lagged, with the stock up just 6.5%, but the structure of this consolidation is worth noting. The $210 level has capped every major breakout attempt for months, and it continues to act as a wall. If it breaks in the coming weeks or months, especially on volume, there’s room for the stock to run impressively.
Recent earnings, released in May, were strong: PANW posted EPS of $0.80, topping estimates by $0.03, with revenue climbing 15.3% YOY. But the stock failed to break above $210 again this week, sliding more than 5% intraday after reports surfaced on Tuesday that Palo Alto is nearing a $25 billion acquisition of CyberArk (NASDAQ: CYBR).
Earnings and M&A Could Be the Catalysts
This CyberArk deal has drawn mixed reactions. Some view it as a clever strategic play, mainly as Palo Alto aims to broaden its AI cybersecurity offerings. Others see the $20B price tag as steep, especially with PANW already trading at a lofty 110 P/E and a forward P/E of 53.
Still, Jefferies analysts backed the deal, saying it “has significant merit” and reiterated its $235 price target on the stock. Whether or not the deal materializes, the setup for PANW remains clean. A breakout over $210 could signal a significant shift in momentum.
With earnings approaching for both stocks and the cyber sector showing continued strength, FTNT and PANW are two names worth watching closely. If they clear key resistance levels, the next leg higher may be explosive.