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CrowdStrike vs. Zscaler: Which Cybersecurity Stock Has an Edge?
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Key Takeaways
CRWD's Falcon Flex ARR topped $1.69B in Q4 FY26, rising over 120% with strong enterprise adoption.
Zscaler faces margin pressure as newer AI security products prioritize adoption over profitability.
CRWD trades at 18.13X forward sales versus ZS at 6.74X, reflecting stronger growth expectations.
CrowdStrike (CRWD - Free Report) and Zscaler (ZS - Free Report) are both at the forefront of the cybersecurity space, playing key roles in guarding organizations from extensive cyberattacks. While CrowdStrike specializes in endpoint protection and extended detection and response, offering AI-native cloud security through its Falcon platform, Zscaler is a leader in zero trust security and specializes in secure access service edge and cloud security.
CrowdStrike and Zscaler are capitalizing on the rapid improvement of the cybersecurity space, fueled by the rise of complex attacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.28% from 2026 to 2031.
With this strong industry growth forecast, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for CrowdStrike Stock
CrowdStrike provides its cybersecurity services mainly through its Falcon platform. CrowdStrike’s Falcon platform is renowned for being the industry’s first multi-tenant, cloud native, intelligent security solution. The Falcon platform helps secure workloads across on-premise, cloud-based and virtualized environments running on several endpoints, such as desktops, laptops, servers, virtual machines and IoT devices.
CrowdStrike’s cloud-based Falcon platform currently provides 29 cloud modules via a software-as-a-service subscription model that is categorized under three categories: Endpoint Security, Security & IT Operations and Threat Intelligence. The share of subscription-based sales to CrowdStrike’s total revenues grew from 72% in fiscal 2017 to 95% in fiscal 2026.
CrowdStrike’s Falcon Flex subscription model is becoming an important driver of its growth. Falcon Flex makes it easier for customers to access multiple modules of the Falcon platform through a single contract. This makes it easier for customers to deploy additional security products over time and expand their use of the Falcon platform, which has now become the company’s primary go-to-market model.
Annual recurring revenue (ARR) from Flex accounts crossed $1.69 billion, growing more than 120% year over year, in the fourth quarter of fiscal 2026, which shows strong adoption across enterprise customers. CrowdStrike now has more than 1,600 customers using the Flex model. In the fourth quarter alone, the company added more than 350 new Flex customers. Flex customers are also large accounts. On average, each Flex customer generates more than $1 million in ARR.
Falcon Flex is also helping CrowdStrike increase module adoption. Notable example during the fourth quarter includes a large enterprise software company. The customer initially started with CrowdStrike’s threat intelligence module, and is now using 25 different CrowdStrike modules after adopting the Falcon Flex model, committing to a total Falcon Flex contract value of $86 million. If adoption continues to rise, Falcon Flex could remain one of CrowdStrike’s most important contributors to its long-term growth.
The Case for Zscaler Stock
Zscaler is witnessing AI security become a key focus area, driven by rapid enterprise adoption of AI. Rising usage of AI applications is creating risks such as data leakage, prompt injection and unauthorized access and is driving the demand for Zscaler's security solutions.
Zscaler’s AI Protect solution is designed to address these issues by discovering AI usage, managing access to approved applications and inspecting prompts and responses in real time. The company is already seeing traction. In the second quarter, it closed an eight-figure new logo deal with a Fortune 500 semiconductor company that adopted AI Protect to block unsanctioned applications and prevent data leakage. It also signed a seven-figure upsell with a Global 2000 construction company to enforce controls on GenAI usage.
The company is also expanding into agentic security. Management said that AI agents are increasing rapidly and can access critical systems and data. Zscaler’s platform processes over 500 billion transactions per day and is being used to enforce policies for AI agent communication. Management expects agent-driven traffic to grow significantly, which could increase revenues since many AI security offerings are usage-based.
However, Zscaler's newer offerings, such as AI Guard, Agentic Operations and Zero Trust Branch, are limiting the company’s ability to expand its gross margins. Zscaler's newer products are made to prioritize adoption speed over profitability. In the second quarter of fiscal 2026, the gross margin remained flat. In the previous quarter, the gross margin slipped to 79.9% from 80.6% a year ago. While gross margins are expected to remain around 80% in the third quarter of fiscal 2026, the risk is that as these fast-growing products take a larger share of revenues, margin expansion could be delayed.
How Do Estimates Compare for CRWD & ZS?
The Zacks Consensus Estimate for CrowdStrike’s fiscal 2027 sales and EPS implies year-over-year growth of 22.8% and 30%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 sales and EPS implies year-over-year growth of 24% and 21.6%, respectively.
Image Source: Zacks Investment Research
CRWD vs. ZS: Price Performance and Valuation
In the past six months, shares of ZS and CRWD have plunged 46.6% and 11.8%, respectively.
CRWD vs. ZS: 6-Month Price Return Performance
Image Source: Zacks Investment Research
CrowdStrike is trading at a forward sales multiple of 18.13X, higher than Zscaler’s 6.74X. CRWD’s higher premium seems justified, given its earnings are projected to grow at a higher rate than ZS. CRWD’s valuations also reflect its high growth expectations and robust profitability.
CRWD vs. ZS: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: CRWD Has an Edge Over ZS
Both CrowdStrike and Zscaler are key players in the cybersecurity space, but Zscaler is facing near-term headwinds as its newer products are prioritizing adoption over profitability, which could limit the company's ability to expand its gross margins in the near term.
CrowdStrike, on the other hand, is witnessing strong adoption of its Falcon platform, which is helping the company win larger deals, increase module usage and drive higher recurring revenues. With stronger earnings momentum, CrowdStrike appears to have a clear edge over Zscaler at present.
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CrowdStrike vs. Zscaler: Which Cybersecurity Stock Has an Edge?
Key Takeaways
CrowdStrike (CRWD - Free Report) and Zscaler (ZS - Free Report) are both at the forefront of the cybersecurity space, playing key roles in guarding organizations from extensive cyberattacks. While CrowdStrike specializes in endpoint protection and extended detection and response, offering AI-native cloud security through its Falcon platform, Zscaler is a leader in zero trust security and specializes in secure access service edge and cloud security.
CrowdStrike and Zscaler are capitalizing on the rapid improvement of the cybersecurity space, fueled by the rise of complex attacks, including credential theft and abuse, remote desktop protocol attacks and social engineering-based initial access. Per a Mordor Intelligence report, the cybersecurity market is projected to witness a CAGR of 12.28% from 2026 to 2031.
With this strong industry growth forecast, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.
The Case for CrowdStrike Stock
CrowdStrike provides its cybersecurity services mainly through its Falcon platform. CrowdStrike’s Falcon platform is renowned for being the industry’s first multi-tenant, cloud native, intelligent security solution. The Falcon platform helps secure workloads across on-premise, cloud-based and virtualized environments running on several endpoints, such as desktops, laptops, servers, virtual machines and IoT devices.
CrowdStrike’s cloud-based Falcon platform currently provides 29 cloud modules via a software-as-a-service subscription model that is categorized under three categories: Endpoint Security, Security & IT Operations and Threat Intelligence. The share of subscription-based sales to CrowdStrike’s total revenues grew from 72% in fiscal 2017 to 95% in fiscal 2026.
CrowdStrike’s Falcon Flex subscription model is becoming an important driver of its growth. Falcon Flex makes it easier for customers to access multiple modules of the Falcon platform through a single contract. This makes it easier for customers to deploy additional security products over time and expand their use of the Falcon platform, which has now become the company’s primary go-to-market model.
Annual recurring revenue (ARR) from Flex accounts crossed $1.69 billion, growing more than 120% year over year, in the fourth quarter of fiscal 2026, which shows strong adoption across enterprise customers. CrowdStrike now has more than 1,600 customers using the Flex model. In the fourth quarter alone, the company added more than 350 new Flex customers. Flex customers are also large accounts. On average, each Flex customer generates more than $1 million in ARR.
Falcon Flex is also helping CrowdStrike increase module adoption. Notable example during the fourth quarter includes a large enterprise software company. The customer initially started with CrowdStrike’s threat intelligence module, and is now using 25 different CrowdStrike modules after adopting the Falcon Flex model, committing to a total Falcon Flex contract value of $86 million. If adoption continues to rise, Falcon Flex could remain one of CrowdStrike’s most important contributors to its long-term growth.
The Case for Zscaler Stock
Zscaler is witnessing AI security become a key focus area, driven by rapid enterprise adoption of AI. Rising usage of AI applications is creating risks such as data leakage, prompt injection and unauthorized access and is driving the demand for Zscaler's security solutions.
Zscaler’s AI Protect solution is designed to address these issues by discovering AI usage, managing access to approved applications and inspecting prompts and responses in real time. The company is already seeing traction. In the second quarter, it closed an eight-figure new logo deal with a Fortune 500 semiconductor company that adopted AI Protect to block unsanctioned applications and prevent data leakage. It also signed a seven-figure upsell with a Global 2000 construction company to enforce controls on GenAI usage.
The company is also expanding into agentic security. Management said that AI agents are increasing rapidly and can access critical systems and data. Zscaler’s platform processes over 500 billion transactions per day and is being used to enforce policies for AI agent communication. Management expects agent-driven traffic to grow significantly, which could increase revenues since many AI security offerings are usage-based.
However, Zscaler's newer offerings, such as AI Guard, Agentic Operations and Zero Trust Branch, are limiting the company’s ability to expand its gross margins. Zscaler's newer products are made to prioritize adoption speed over profitability. In the second quarter of fiscal 2026, the gross margin remained flat. In the previous quarter, the gross margin slipped to 79.9% from 80.6% a year ago. While gross margins are expected to remain around 80% in the third quarter of fiscal 2026, the risk is that as these fast-growing products take a larger share of revenues, margin expansion could be delayed.
How Do Estimates Compare for CRWD & ZS?
The Zacks Consensus Estimate for CrowdStrike’s fiscal 2027 sales and EPS implies year-over-year growth of 22.8% and 30%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 sales and EPS implies year-over-year growth of 24% and 21.6%, respectively.
Image Source: Zacks Investment Research
CRWD vs. ZS: Price Performance and Valuation
In the past six months, shares of ZS and CRWD have plunged 46.6% and 11.8%, respectively.
CRWD vs. ZS: 6-Month Price Return Performance
Image Source: Zacks Investment Research
CrowdStrike is trading at a forward sales multiple of 18.13X, higher than Zscaler’s 6.74X. CRWD’s higher premium seems justified, given its earnings are projected to grow at a higher rate than ZS. CRWD’s valuations also reflect its high growth expectations and robust profitability.
CRWD vs. ZS: Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Conclusion: CRWD Has an Edge Over ZS
Both CrowdStrike and Zscaler are key players in the cybersecurity space, but Zscaler is facing near-term headwinds as its newer products are prioritizing adoption over profitability, which could limit the company's ability to expand its gross margins in the near term.
CrowdStrike, on the other hand, is witnessing strong adoption of its Falcon platform, which is helping the company win larger deals, increase module usage and drive higher recurring revenues. With stronger earnings momentum, CrowdStrike appears to have a clear edge over Zscaler at present.
CrowdStrike and Zscaler carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.