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Zscaler Bets on AI Agents: Can It Become a Major Growth Catalyst?
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Key Takeaways
ZS is expanding its platform to secure AI agents as customers deploy autonomous tools to access data.
Zscaler's revenues grew 25% y/y to $850 million in Q3'26, whereas ARR also jumped 25% to $3.53 billion.
ZS's AI Protect logged $100M bookings in 12 months, while Symmetry's buyout should improve AI visibility.
Zscaler, Inc. (ZS - Free Report) is positioning itself to benefit from the next wave of artificial intelligence (AI) adoption by expanding its security platform to protect AI agents. As businesses increasingly deploy AI-powered tools and autonomous agents to access applications and data, the company believes that this emerging market could become a meaningful growth driver.
The strategy comes at a time when Zscaler is already seeing strong business momentum. In the third quarter of fiscal 2026, the company’s annual recurring revenues (ARR) rose 25% year over year to $3.53 billion. Revenues increased 25% to $850 million, while remaining performance obligations climbed roughly 30% to $6.5 billion, highlighting strong demand for its cybersecurity offerings.
AI-related products are becoming an important part of the recent growth momentum. Zscaler’s AI Protect solution, which helps customers discover AI assets, enforce security controls and prevent data leaks, generated more than $100 million in bookings over the past 12 months. Management noted that customer interest continues to grow as organizations seek ways to secure both public AI applications and internally developed AI models.
The company is also strengthening its capabilities through partnerships and acquisitions. Its planned acquisition of Symmetry Systems is expected to improve visibility into how users, applications, data and AI agents interact across enterprise environments. This should help Zscaler deliver stronger security controls for agentic AI deployments.
With AI adoption accelerating and cyber threats becoming more sophisticated, Zscaler’s expanding AI security portfolio could create a significant long-term growth opportunity. If enterprises increasingly rely on AI agents, the company may be well-positioned to capture a larger share of cybersecurity spending. The Zacks Consensus Estimate for Zscaler’s fiscal 2026 revenues is pegged at $3.33 billion, indicating 24.5% year-over-year growth.
How Do Zscaler’s Rivals Fare in the AI Security Race?
Zscaler competes with Palo Alto Networks, Inc. (PANW - Free Report) and CrowdStrike Holdings, Inc. (CRWD - Free Report) in the AI security space.
Palo Alto Networks is aggressively expanding its AI-driven security offerings through its platformization strategy. In the third quarter of fiscal 2026, the company’s revenues rose 31% year over year to $3 billion, while its next-generation security ARR exceeded $8 billion. Palo Alto Networks is integrating AI capabilities across network, cloud and security operations products, helping customers manage growing risks from AI applications and automated agents. Its broad product portfolio and large enterprise customer base make it a formidable rival to Zscaler.
CrowdStrike is another important competitor as enterprises look to secure AI-powered workloads and identities. In the first quarter of fiscal 2027, CrowdStrike’s revenues grew 26% year over year to $1.39 billion, whereas ARR jumped 24% to $5.51 billion. The company continues to enhance its Falcon platform with AI-native threat detection, identity protection and cloud security features. CrowdStrike’s strength in endpoint security gives it a strong position as AI agents increasingly interact with corporate devices, applications and data.
While both companies are investing heavily in AI security, Zscaler is differentiating itself through its Zero Trust architecture and its growing focus on securing AI agents, AI applications and machine-to-machine interactions across enterprise networks.
ZS shares have plunged 55.3% over the past year against the Zacks Security industry’s rise of 29.6%.
Zscaler 1-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 5.73, significantly below the industry’s average of 16.25.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 and 2027 earnings implies year-over-year increases of 23.2% and 12.1%, respectively. Estimates for fiscal 2026 have been revised upward over the past 30 days, while being revised downward for fiscal 2027.
View the Zacks #1 Rank List
Image: Shutterstock
Zscaler Bets on AI Agents: Can It Become a Major Growth Catalyst?
Key Takeaways
Zscaler, Inc. (ZS - Free Report) is positioning itself to benefit from the next wave of artificial intelligence (AI) adoption by expanding its security platform to protect AI agents. As businesses increasingly deploy AI-powered tools and autonomous agents to access applications and data, the company believes that this emerging market could become a meaningful growth driver.
The strategy comes at a time when Zscaler is already seeing strong business momentum. In the third quarter of fiscal 2026, the company’s annual recurring revenues (ARR) rose 25% year over year to $3.53 billion. Revenues increased 25% to $850 million, while remaining performance obligations climbed roughly 30% to $6.5 billion, highlighting strong demand for its cybersecurity offerings.
AI-related products are becoming an important part of the recent growth momentum. Zscaler’s AI Protect solution, which helps customers discover AI assets, enforce security controls and prevent data leaks, generated more than $100 million in bookings over the past 12 months. Management noted that customer interest continues to grow as organizations seek ways to secure both public AI applications and internally developed AI models.
The company is also strengthening its capabilities through partnerships and acquisitions. Its planned acquisition of Symmetry Systems is expected to improve visibility into how users, applications, data and AI agents interact across enterprise environments. This should help Zscaler deliver stronger security controls for agentic AI deployments.
With AI adoption accelerating and cyber threats becoming more sophisticated, Zscaler’s expanding AI security portfolio could create a significant long-term growth opportunity. If enterprises increasingly rely on AI agents, the company may be well-positioned to capture a larger share of cybersecurity spending. The Zacks Consensus Estimate for Zscaler’s fiscal 2026 revenues is pegged at $3.33 billion, indicating 24.5% year-over-year growth.
How Do Zscaler’s Rivals Fare in the AI Security Race?
Zscaler competes with Palo Alto Networks, Inc. (PANW - Free Report) and CrowdStrike Holdings, Inc. (CRWD - Free Report) in the AI security space.
Palo Alto Networks is aggressively expanding its AI-driven security offerings through its platformization strategy. In the third quarter of fiscal 2026, the company’s revenues rose 31% year over year to $3 billion, while its next-generation security ARR exceeded $8 billion. Palo Alto Networks is integrating AI capabilities across network, cloud and security operations products, helping customers manage growing risks from AI applications and automated agents. Its broad product portfolio and large enterprise customer base make it a formidable rival to Zscaler.
CrowdStrike is another important competitor as enterprises look to secure AI-powered workloads and identities. In the first quarter of fiscal 2027, CrowdStrike’s revenues grew 26% year over year to $1.39 billion, whereas ARR jumped 24% to $5.51 billion. The company continues to enhance its Falcon platform with AI-native threat detection, identity protection and cloud security features. CrowdStrike’s strength in endpoint security gives it a strong position as AI agents increasingly interact with corporate devices, applications and data.
While both companies are investing heavily in AI security, Zscaler is differentiating itself through its Zero Trust architecture and its growing focus on securing AI agents, AI applications and machine-to-machine interactions across enterprise networks.
Zscaler’s Price Performance, Valuation & Estimates
ZS shares have plunged 55.3% over the past year against the Zacks Security industry’s rise of 29.6%.
Zscaler 1-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 5.73, significantly below the industry’s average of 16.25.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 and 2027 earnings implies year-over-year increases of 23.2% and 12.1%, respectively. Estimates for fiscal 2026 have been revised upward over the past 30 days, while being revised downward for fiscal 2027.
Image Source: Zacks Investment Research
Zscaler currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.