Gabz
Stock & Crypto Trader, SuperTrend Indicator Owner
Zscaler's 31% drop is a mispricing, because AI agents multiply endpoints and attack surface, raising demand for the zero-trust security that Zscaler leads. The selloff came the same day Robinhood opened trading to AI agents, so the market is selling a picks-and-shovels name of the AI era while celebrating that era, exactly the setup for +200% trades. x.comÂ
Zscaler looks near a bottom as it retests a long-term trendline that has never been broken, with weekly RSI at 27 and MFI oversold for the first time in its history; every prior such setup bottomed within sessions. Support sits at $134-135, with deeper buying near $125 and resistance at $160-175. AI will strengthen, not kill, cybersecurity, though not every name. x.comÂ
Zscaler holds a near-monopoly in public-sector zero trust and is becoming the default way to secure enterprise AI traffic. Early-July procurement updates show it renewed and expanded zero-trust contracts with the Department of Defense and core federal agencies, backed by top-tier FedRAMP High certification. As AI agents and model queries create data-leak risk, adoption of its AI data and zero-trust gateway products surged 85% sequentially, and LLM providers co-recommend it. x.comÂ
Zscaler's AI-era cybersecurity thesis is now showing up in bookings. Q3 beat across every line: ARR crossed $3.5B, up 25% or 21% excluding Red Canary, and non-GAAP operating margin hit a record 23%. AI Protect bookings topped $100M, Data Security ARR passed $500M, and Zero Trust Everywhere customers rose from 550+ to 700+. Partnerships with Anthropic and OpenAI and the planned Symmetry Systems deal for AI agent identity add catalysts; a preliminary 16-17% FY27 outlook sets a credible bar. x.comÂ
Zscaler's management is undermining trust in the stock even after a quarter that beat on revenue, EPS, billings and guidance. On the call the CFO offered a 16-17% FY27 guide before FY26 ended and contradicted himself, leaving investors scared. FCF margin guidance fell on higher data center capex, with 2027 capex guided another 200bp of revenue higher. Mythos looks like the real value-add, making cybersecurity names look like resale wrappers around AI LLMs. Very tough for long-term holders. x.com … Show more
Zscaler stands to benefit as AI's growth raises security needs, a point Elon Musk and Dario Amodei just emphasized, making large pullbacks in the sector a buying opportunity. Q2 revenue was $898M, up 25% year over year, ARR reached $3.77B, AI security bookings rose 50% sequentially, the Z-Flex program reached $770M in quarterly contract value, and non-GAAP operating margin hit a record 24.3%. x.comÂ
Zscaler looks like the better cybersecurity buy for the next three years because its valuation has diverged sharply from CrowdStrike's. Zscaler trades at 5.7x next-twelve-month revenue with 17-18% expected annual growth, versus CrowdStrike at 31.1x revenue and 150x earnings with 21-22% growth, probably the biggest gap ever between them. A 25% CAGR over 3-5 years is hard to model for CrowdStrike at that price. Zscaler has been beaten up for good reasons. x.com x.comÂ
Zscaler should sell off on its guide for 9.5% organic ARR growth in fiscal 2027. That makes it a slow-moving software company with excellent dollar-based net retention but a withering growth engine, not an AI winner. x.comÂ
AI-powered attacks are spreading so fast that companies are unlikely to cut security budgets, even if they slow broader AI spending. The latest wave hit governments, banks, hospitals, grocery chains and businesses, while AI finds vulnerabilities and breaks in around the clock. That is why Cloudflare, Zscaler, CrowdStrike and Palo Alto Networks rose as broader AI concerns hit tech shares. x.com x.comÂ
Cybersecurity may be the next big AI trade, because AI agents create a whole new attack surface. CrowdStrike CEO George Kurtz says the threat is now autonomous campaigns at machine speed, and each agent becomes a privileged identity needing least-privilege access and a kill switch, pushing security into runtime infrastructure. CrowdStrike, Palo Alto and Zscaler are in a land grab. CrowdStrike's 15 years of telemetry can't be copied, making its Threat Graph a network effect. x.comÂ
Zscaler is not cheap at 40x earnings, about double an initial guess of 20x. @StockSavvyShay pulled up the real figure live on air ahead of Zscaler's Thursday report. x.comÂ
Zscaler could get a catch-up trade if money starts rotating into cybersecurity laggards, with CrowdStrike up eight days in a row. x.comÂ
