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Shares of F5 fell about 20% on Wednesday, a day after the Seattle-based company beat Wall Streetβs estimates and said it would boost spending to capitalize on expected growth in the AI security market.
The application security and delivery companyβs stock was trading around $368 late Wednesday morning, down from $459 at Tuesdayβs close, wiping out about $5 billion in market value. That put F5 on pace for its biggest one-day drop in more than 13 years, according to Barronβs. Before the drop, F5βs shares had climbed nearly 80% this year.
F5βs revenue for its fiscal fourth quarter rose 13% to $917 million, and product revenue jumped 23%. Adjusted earnings of $4.42 a share beat estimates of about $4.30.
Slower growth ahead: Investors seem to be focused on the outlook. F5 expects revenue to grow 8% to 9% in fiscal 2027, down from 11% this year, and adjusted earnings per share to grow 3% to 5%. Itβs also projecting lower margins as memory and storage components get more expensive, and as it doubles its team of AI security sellers.
F5βs hardware business is also cooling off. Systems revenue jumped 29% in the quarter as customers replaced aging equipment, but F5 Chief Financial Officer Cooper Werner said on the earnings call that those replacements will taper off in the second half of fiscal 2027.
The AI bet: F5 is spending more to go after AI security. CEO FranΓ§ois Locoh-Donou said on the call that the company will double its team of specialist AI security sellers in fiscal 2027 and more than double its marketing in that area. Itβs also adding compensation incentives for all of its field sellers to discuss AI security with customers.
F5βs adjusted operating margin fell to 33.7% in the quarter, from 37% a year earlier.
Locoh-Donou said F5βs AI-related bookings topped $100 million in fiscal 2026, up about 300%. Most of that came from AI data delivery, which moves data to and from AI systems, rather than security. More than 300 customers are using an AI-powered web application firewall that F5 launched in March.
The company estimates the AI market it sells into will grow from about $1 billion this year to $11 billion by 2030.
Wall Street reaction: Piper Sandler downgraded the stock to neutral, according to The Motley Fool. Analysts at William Blair, which rates F5 βmarket perform,β wrote in a research note that βthe AI opportunity has yet to contribute meaningfully to the top line.β
Weβve contacted F5 for comment on the stock decline.
F5 has been building out its AI security business, including its acquisition of SurePath AI. Locoh-Donou talked about the companyβs path from the early web to AI security on a GeekWire Podcast episode marking F5βs 30th anniversary. He said companies adopting AI are losing track of what those systems can access, and that juggling separate tools to manage it is a burden, which is why F5 is building a single AI security platform.
This week, F5βs board authorized an additional $1.5 billion in stock buybacks, on top of $322 million remaining in its existing program.
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Defenders across the world face the burden of responding to yet another botched code-execution vulnerability, this time in boot-time firmware used by most of the worldβs server vendors and data centers.
The vulnerability, with a severity rating of 9.5 out of 10, resides in the TianoCore EDK II, an open source codebase that hardware makers and cloud providers use to create the UEFI firmware that runs during the boot-up sequence. Last year, a representative of the UEFI Forum called EDK2 the "preeminent solution / implementation of the UEFI specifications." Virtually all UEFI suppliers (sometimes still called IBVs or independent BIOS vendors), including AMI, Insyde, and Phoenix, use the reference code extensively. Project Mu, Microsoft's hardened EDK2 fork, used the code containing the vulnerable component as well.
The vulnerability, tracked as CVE-2026-97631, is a memory-corruption flaw in an ICMP component that attackers can exploit to execute malicious code that runs before the operating system and firmware can implement defenses like Secure Boot, which establishes a chain of trust for all code, including the Trusted Platform Module (TPM), loaded during boot. While final payloads delivered by CVE-2026-97631 have no persistenceβmeaning they run only onceβthey can give attackers a wide opening to install other payloads that also run each time early in the boot process.


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