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Zscaler's AI Bookings Jump 50%: Can AI Products Drive Growth?
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Key Takeaways
Zscaler's Security for AI bookings rose more than 50% sequentially in fiscal Q4 2026.
AI Protect bookings topped $100 million over 12 months, while 70% of AI deals included Data Security.
Zscaler's fiscal 2027 revenue guidance implies about 17% growth, down from 25% in fiscal 2026.
Zscaler, Inc. (ZS - Free Report) is gaining traction in the fast-growing market for securing artificial intelligence (AI), with AI-related bookings becoming a new growth driver. The company’s Security for AI bookings increased more than 50% sequentially in the fourth quarter of fiscal 2026. This momentum shows that customers are looking for tools to control AI-related risks.
Zscaler’s Security for AI platform helps enterprises discover AI applications, control access, protect data and manage risks as employees and AI agents use these technologies. In the fourth quarter, the company also introduced Zero Trust Exchange for Agents and Endpoint AI Security, which are expected to scale in the second half of fiscal 2027. Agentic SecOps is another planned offering aimed at addressing security risks from AI-driven operations.
Customer demand is also expanding across Zscaler’s AI portfolio. AI Protect bookings crossed $100 million over the trailing 12 months. In the fourth quarter, about 70% of Security for AI deals also included Data Security, pointing to opportunities for cross-selling.
The opportunity is meaningful, but scaling quickly will require strong execution. Zscaler generated $898.2 million in fourth-quarter revenues, up 25% year over year. Annual recurring revenues (ARR) rose 25% to $3.77 billion. However, fiscal 2027 revenue guidance implies growth of about 17%, significantly lower than 25% registered in fiscal 2026. If Zscaler converts rising AI interest into larger, repeatable contracts, AI could help broaden its growth engine and support platform adoption.
Zscaler’s Competitors Are Also Expanding AI Security Push
Zscaler’s rivals such as Palo Alto Networks, Inc. (PANW - Free Report) and CrowdStrike Holdings, Inc. (CRWD - Free Report) are also enhancing their capabilities in the AI security space.
Palo Alto Networks is targeting AI deployments through its security platforms, giving enterprises tools to protect AI workloads and manage emerging risks. The company’s Prisma AIRS has expanded from securing AI models and applications into a broader architecture for agentic security. In the fourth quarter of fiscal 2026, AIRS reached about $120 million in ARR within roughly one year of general availability and exceeded 800 customers, more than doubling sequentially.
Overall, Palo Alto Networks’ fourth-quarter revenues rose 34% year over year to $3.41 billion, while Next-Generation Security ARR jumped 63% to $9.1 billion. For fiscal 2027, it expects revenues of $14.1-$14.2 billion, up 23%-24%, showing continued momentum.
CrowdStrike is another competitor building AI security capabilities across its platform. The company is extending Falcon into AI security as agentic applications create new identity, data and endpoint risks. In the second quarter of fiscal 2027, AIDR (AI Detection and Response) ending ARR nearly tripled from the first quarter. During its last quarterly results, the company also stated that endpoint usage of Claude rose more than 400% and custom agent usage increased more than 100% in a customer sample.
Its fourth-quarter revenues surged 25.8% year over year to $1.47 billion, while total ARR grew 25% to $5.84 billion. CrowdStrike has introduced Continuous Identity for AI Agents and expanded AIDR integrations across major AI gateways. Management expects AI to drive a broader security modernization cycle, giving Falcon additional opportunities across endpoint, identity, cloud and SIEM as enterprises govern AI adoption broadly across expanding deployments.
ZS shares have plunged 12.3% year to date, while the Zacks Security industry has surged 88.1%.
Zscaler YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 8.01, significantly below the industry’s average of 18.61.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2027 and 2028 earnings implies a year-over-year increase of 15% and 13%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
View the Zacks #1 Rank List
Image: Shutterstock
Zscaler's AI Bookings Jump 50%: Can AI Products Drive Growth?
Key Takeaways
Zscaler, Inc. (ZS - Free Report) is gaining traction in the fast-growing market for securing artificial intelligence (AI), with AI-related bookings becoming a new growth driver. The company’s Security for AI bookings increased more than 50% sequentially in the fourth quarter of fiscal 2026. This momentum shows that customers are looking for tools to control AI-related risks.
Zscaler’s Security for AI platform helps enterprises discover AI applications, control access, protect data and manage risks as employees and AI agents use these technologies. In the fourth quarter, the company also introduced Zero Trust Exchange for Agents and Endpoint AI Security, which are expected to scale in the second half of fiscal 2027. Agentic SecOps is another planned offering aimed at addressing security risks from AI-driven operations.
Customer demand is also expanding across Zscaler’s AI portfolio. AI Protect bookings crossed $100 million over the trailing 12 months. In the fourth quarter, about 70% of Security for AI deals also included Data Security, pointing to opportunities for cross-selling.
The opportunity is meaningful, but scaling quickly will require strong execution. Zscaler generated $898.2 million in fourth-quarter revenues, up 25% year over year. Annual recurring revenues (ARR) rose 25% to $3.77 billion. However, fiscal 2027 revenue guidance implies growth of about 17%, significantly lower than 25% registered in fiscal 2026. If Zscaler converts rising AI interest into larger, repeatable contracts, AI could help broaden its growth engine and support platform adoption.
Zscaler’s Competitors Are Also Expanding AI Security Push
Zscaler’s rivals such as Palo Alto Networks, Inc. (PANW - Free Report) and CrowdStrike Holdings, Inc. (CRWD - Free Report) are also enhancing their capabilities in the AI security space.
Palo Alto Networks is targeting AI deployments through its security platforms, giving enterprises tools to protect AI workloads and manage emerging risks. The company’s Prisma AIRS has expanded from securing AI models and applications into a broader architecture for agentic security. In the fourth quarter of fiscal 2026, AIRS reached about $120 million in ARR within roughly one year of general availability and exceeded 800 customers, more than doubling sequentially.
Overall, Palo Alto Networks’ fourth-quarter revenues rose 34% year over year to $3.41 billion, while Next-Generation Security ARR jumped 63% to $9.1 billion. For fiscal 2027, it expects revenues of $14.1-$14.2 billion, up 23%-24%, showing continued momentum.
CrowdStrike is another competitor building AI security capabilities across its platform. The company is extending Falcon into AI security as agentic applications create new identity, data and endpoint risks. In the second quarter of fiscal 2027, AIDR (AI Detection and Response) ending ARR nearly tripled from the first quarter. During its last quarterly results, the company also stated that endpoint usage of Claude rose more than 400% and custom agent usage increased more than 100% in a customer sample.
Its fourth-quarter revenues surged 25.8% year over year to $1.47 billion, while total ARR grew 25% to $5.84 billion. CrowdStrike has introduced Continuous Identity for AI Agents and expanded AIDR integrations across major AI gateways. Management expects AI to drive a broader security modernization cycle, giving Falcon additional opportunities across endpoint, identity, cloud and SIEM as enterprises govern AI adoption broadly across expanding deployments.
Zscaler’s Price Performance, Valuation & Estimates
ZS shares have plunged 12.3% year to date, while the Zacks Security industry has surged 88.1%.
Zscaler YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ZS trades at a forward price-to-sales ratio of 8.01, significantly below the industry’s average of 18.61.
Zscaler Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2027 and 2028 earnings implies a year-over-year increase of 15% and 13%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward over the past 30 days.
Image Source: Zacks Investment Research
Zscaler currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.