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Zscaler Stock Soars 24% in a Month: Hold Tight or Book Profits?
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Key Takeaways
Zscaler has rallied 24.1% in a month, yet remains nearly 55% below its 52-week high.
Revenues rose 26% to $816M in Q2 FY26, with non-GAAP EPS up nearly 29.5% to $1.01.
Key growth pillars topped $1B ARR, while shares trade at 6.41X forward P/S vs. 12.55X industry average.
Zscaler, Inc. (ZS - Free Report) stock has risen 24.1% over the past month, making it one of the stronger performers in the technology space despite continued macroeconomic uncertainty and geopolitical tensions. The rally has comfortably outpaced the broader Zacks Computer and Technology sector, which has gained 16.4% during the same period.
The sharp move higher is not limited to Zscaler alone. The broader cybersecurity space has regained momentum after a difficult start to 2026. Companies such as Fortinet Inc. (FTNT - Free Report) , CrowdStrike Holdings, Inc. (CRWD - Free Report) and Palo Alto Networks, Inc. (PANW - Free Report) have also witnessed sharp appreciation in their respective share prices over the past months. Shares of Fortinet, CrowdStrike and Palo Alto Networks have soared 44.9%, 31.2% and 28%, respectively.
Zscaler One-Month Price Return Performance
Image Source: Zacks Investment Research
The recent rebound suggests investors are once again becoming optimistic about cybersecurity stocks after the heavy sell-off seen earlier this year. In the first quarter of 2026, the Zacks Security industry declined 13.6% as investors worried about stretched valuations, rising competition, geopolitical risks and slowing enterprise spending. Those concerns triggered aggressive profit-booking across the sector.
However, the correction pushed several quality cybersecurity names far below their previous highs. Even after the latest rally, Zscaler stock remains nearly 55% below its 52-week high of $336.99, based on the May 8 closing price of $152.13. This indicates that the stock is still in recovery mode rather than trading at overheated levels.
Investor confidence in the cybersecurity space has also improved after strong quarterly results from peers like Fortinet. Last week, the company reported first-quarter 2026 revenues of $1.85 billion, which grew 20% year over year and beat the Zacks Consensus Estimate by 6.79%. Fortinet’s first-quarter non-GAAP earnings of 82 cents surpassed the consensus mark by 34.43% and rose 41% year over year. Such results reinforce the view that cybersecurity spending remains a priority for enterprises despite economic uncertainty.
Another major tailwind for the industry is the rapid rise of artificial intelligence. As companies adopt AI tools more aggressively, the need for advanced security solutions is increasing. According to Fortune Business Insights, the global cybersecurity market is projected to grow to $248.28 billion in 2026 from $218.98 billion in 2025.
While macroeconomic headwinds still exist, they appear more temporary than structural. The long-term demand environment for cybersecurity remains strong, and Zscaler looks well-positioned to benefit from that trend. For investors already holding the stock, the recent rally does not yet appear to fully reflect the company’s long-term growth opportunities.
Zscaler’s Financial Results Show Real Strength
Zscaler’s latest financial performance highlights that enterprise demand for its offerings remains healthy. In the second quarter of fiscal 2026, revenues increased 26% year over year to $816 million. Its emerging products continued to grow faster than its core business, showing that newer offerings are gaining traction with customers. Non-GAAP earnings rose nearly 29.5% year over year to $1.01 per share.
The company’s expanding customer base further strengthens its market positioning. Zscaler ended the second quarter with 728 customers generating more than $1 million in annual recurring revenues (ARR). Its penetration among large enterprises also remains impressive, with more than 45% of Fortune 500 companies and nearly 40% of Global 2000 companies using its platform.
Zscaler is also benefiting from several long-term industry trends, including cloud migration, AI-driven cybersecurity demand and improving enterprise IT spending. Its focus on large enterprise deals and continuous product innovation should help support strong growth through fiscal 2026 and beyond. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates strong double-digit revenue and earnings per share growth.
Image Source: Zacks Investment Research
Zscaler’s Investments Could Fuel Long-Term Growth
Zscaler continues to strengthen its competitive position through aggressive innovation and targeted investments. The company’s three major growth pillars — AI Security, Zero Trust Everywhere and Data Security Everywhere — have now collectively crossed $1 billion in ARR. These businesses are growing faster than the company’s overall revenue base.
AI Security is emerging as a particularly strong opportunity. Management expects AI Security ARR to surpass $500 million in fiscal 2026 as enterprises adopt solutions like AI Guard and agentic operations. Meanwhile, Zero Trust Everywhere has already added more than 550 enterprises, surpassing the company’s original 390 adoption target much earlier than expected. Data Security Everywhere also offers meaningful upsell potential since many customers are still using only a limited number of modules.
Zscaler appears to be gaining an early advantage in AI security, one of the fastest-growing areas in enterprise software. The company processed nearly 1 trillion AI transactions in calendar year 2025, highlighting the accelerating adoption of AI applications among businesses. To address emerging risks such as prompt injection and model poisoning, Zscaler launched AI Guard, which is currently being evaluated by large enterprises.
Its Agentic Operations platform is also gaining traction and could become a major contributor to AI Security ARR in fiscal 2026. The integration of Red Canary’s AI capabilities further strengthens Zscaler’s AI-powered security operations platform and improves its positioning in the enterprise cybersecurity market.
Another important growth driver is the company’s Z-Flex program, which is helping it secure larger multi-year contracts. Introduced in the third quarter of fiscal 2025, the program generated more than $290 million in total contract value bookings in the second quarter of fiscal 2026, marking a strong 65% sequential increase. Z-Flex allows customers to adopt multiple products gradually under a predictable pricing structure, making long-term platform adoption easier. This strategy not only increases customer stickiness but also improves revenue visibility.
Discounted Valuation Justifies Holding ZS Stock
Even after the recent rally, Zscaler’s valuation still looks attractive relative to the broader cybersecurity industry. The stock currently trades at a forward 12-month Price/Sales (P/S) ratio of 6.41, well below the industry average of 12.55.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Compared with other cybersecurity peers, Zscaler’s P/S multiple is significantly lower than Fortinet, Palo Alto Networks and CrowdStrike. At present, Fortinet, Palo Alto Networks and CrowdStrike have a forward 12-month P/S multiple of 10.45, 13.11 and 21.42, respectively.
Given Zscaler’s strong growth profile, expanding AI opportunities and improving enterprise adoption, the current valuation appears reasonable and supportive of further upside over the long term.
Final Thoughts: Hold ZS Stock for Now
Although Zscaler continues to face near-term risks tied to macroeconomic uncertainty and cautious enterprise spending, the company’s strong execution, expanding AI-driven opportunities and leadership in cloud security make the stock worth holding. Its growing customer base, rising adoption of AI security solutions and discounted valuation compared with peers support a constructive long-term outlook. Considering these, it is prudent to hold ZS stock right now.
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Zscaler Stock Soars 24% in a Month: Hold Tight or Book Profits?
Key Takeaways
Zscaler, Inc. (ZS - Free Report) stock has risen 24.1% over the past month, making it one of the stronger performers in the technology space despite continued macroeconomic uncertainty and geopolitical tensions. The rally has comfortably outpaced the broader Zacks Computer and Technology sector, which has gained 16.4% during the same period.
The sharp move higher is not limited to Zscaler alone. The broader cybersecurity space has regained momentum after a difficult start to 2026. Companies such as Fortinet Inc. (FTNT - Free Report) , CrowdStrike Holdings, Inc. (CRWD - Free Report) and Palo Alto Networks, Inc. (PANW - Free Report) have also witnessed sharp appreciation in their respective share prices over the past months. Shares of Fortinet, CrowdStrike and Palo Alto Networks have soared 44.9%, 31.2% and 28%, respectively.
Zscaler One-Month Price Return Performance
Image Source: Zacks Investment Research
The recent rebound suggests investors are once again becoming optimistic about cybersecurity stocks after the heavy sell-off seen earlier this year. In the first quarter of 2026, the Zacks Security industry declined 13.6% as investors worried about stretched valuations, rising competition, geopolitical risks and slowing enterprise spending. Those concerns triggered aggressive profit-booking across the sector.
However, the correction pushed several quality cybersecurity names far below their previous highs. Even after the latest rally, Zscaler stock remains nearly 55% below its 52-week high of $336.99, based on the May 8 closing price of $152.13. This indicates that the stock is still in recovery mode rather than trading at overheated levels.
Investor confidence in the cybersecurity space has also improved after strong quarterly results from peers like Fortinet. Last week, the company reported first-quarter 2026 revenues of $1.85 billion, which grew 20% year over year and beat the Zacks Consensus Estimate by 6.79%. Fortinet’s first-quarter non-GAAP earnings of 82 cents surpassed the consensus mark by 34.43% and rose 41% year over year. Such results reinforce the view that cybersecurity spending remains a priority for enterprises despite economic uncertainty.
Another major tailwind for the industry is the rapid rise of artificial intelligence. As companies adopt AI tools more aggressively, the need for advanced security solutions is increasing. According to Fortune Business Insights, the global cybersecurity market is projected to grow to $248.28 billion in 2026 from $218.98 billion in 2025.
While macroeconomic headwinds still exist, they appear more temporary than structural. The long-term demand environment for cybersecurity remains strong, and Zscaler looks well-positioned to benefit from that trend. For investors already holding the stock, the recent rally does not yet appear to fully reflect the company’s long-term growth opportunities.
Zscaler’s Financial Results Show Real Strength
Zscaler’s latest financial performance highlights that enterprise demand for its offerings remains healthy. In the second quarter of fiscal 2026, revenues increased 26% year over year to $816 million. Its emerging products continued to grow faster than its core business, showing that newer offerings are gaining traction with customers. Non-GAAP earnings rose nearly 29.5% year over year to $1.01 per share.
The company’s expanding customer base further strengthens its market positioning. Zscaler ended the second quarter with 728 customers generating more than $1 million in annual recurring revenues (ARR). Its penetration among large enterprises also remains impressive, with more than 45% of Fortune 500 companies and nearly 40% of Global 2000 companies using its platform.
Zscaler is also benefiting from several long-term industry trends, including cloud migration, AI-driven cybersecurity demand and improving enterprise IT spending. Its focus on large enterprise deals and continuous product innovation should help support strong growth through fiscal 2026 and beyond. The Zacks Consensus Estimate for fiscal 2026 and 2027 indicates strong double-digit revenue and earnings per share growth.
Image Source: Zacks Investment Research
Zscaler’s Investments Could Fuel Long-Term Growth
Zscaler continues to strengthen its competitive position through aggressive innovation and targeted investments. The company’s three major growth pillars — AI Security, Zero Trust Everywhere and Data Security Everywhere — have now collectively crossed $1 billion in ARR. These businesses are growing faster than the company’s overall revenue base.
AI Security is emerging as a particularly strong opportunity. Management expects AI Security ARR to surpass $500 million in fiscal 2026 as enterprises adopt solutions like AI Guard and agentic operations. Meanwhile, Zero Trust Everywhere has already added more than 550 enterprises, surpassing the company’s original 390 adoption target much earlier than expected. Data Security Everywhere also offers meaningful upsell potential since many customers are still using only a limited number of modules.
Zscaler appears to be gaining an early advantage in AI security, one of the fastest-growing areas in enterprise software. The company processed nearly 1 trillion AI transactions in calendar year 2025, highlighting the accelerating adoption of AI applications among businesses. To address emerging risks such as prompt injection and model poisoning, Zscaler launched AI Guard, which is currently being evaluated by large enterprises.
Its Agentic Operations platform is also gaining traction and could become a major contributor to AI Security ARR in fiscal 2026. The integration of Red Canary’s AI capabilities further strengthens Zscaler’s AI-powered security operations platform and improves its positioning in the enterprise cybersecurity market.
Another important growth driver is the company’s Z-Flex program, which is helping it secure larger multi-year contracts. Introduced in the third quarter of fiscal 2025, the program generated more than $290 million in total contract value bookings in the second quarter of fiscal 2026, marking a strong 65% sequential increase. Z-Flex allows customers to adopt multiple products gradually under a predictable pricing structure, making long-term platform adoption easier. This strategy not only increases customer stickiness but also improves revenue visibility.
Discounted Valuation Justifies Holding ZS Stock
Even after the recent rally, Zscaler’s valuation still looks attractive relative to the broader cybersecurity industry. The stock currently trades at a forward 12-month Price/Sales (P/S) ratio of 6.41, well below the industry average of 12.55.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Compared with other cybersecurity peers, Zscaler’s P/S multiple is significantly lower than Fortinet, Palo Alto Networks and CrowdStrike. At present, Fortinet, Palo Alto Networks and CrowdStrike have a forward 12-month P/S multiple of 10.45, 13.11 and 21.42, respectively.
Given Zscaler’s strong growth profile, expanding AI opportunities and improving enterprise adoption, the current valuation appears reasonable and supportive of further upside over the long term.
Final Thoughts: Hold ZS Stock for Now
Although Zscaler continues to face near-term risks tied to macroeconomic uncertainty and cautious enterprise spending, the company’s strong execution, expanding AI-driven opportunities and leadership in cloud security make the stock worth holding. Its growing customer base, rising adoption of AI security solutions and discounted valuation compared with peers support a constructive long-term outlook. Considering these, it is prudent to hold ZS stock right now.
Zscaler currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.