Yimin X
Founder of YX Insights, Ex-FX/Rates Market Maker
Zscaler stands out in cybersecurity, now a must-own sector as agentic AI rapidly expands the attack surface with more endpoints, automation and sophisticated threats. It grows 25% yet trades at a discount to peers like Palo Alto Networks and Fortinet; the multiple has compressed while demand has not, making it attractive in a structurally growing sector. 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
CrowdStrike may distinguish itself from an expensive cybersecurity group by showing more breakneck growth at earnings next month. Fortinet's slowing product revenue exposed how much relentless execution investors had priced into the group's extreme multiples, pulling CrowdStrike down in sympathy. CrowdStrike remains in a higher tier than Fortinet, which itself ranks above SentinelOne. x.com x.comÂ
Zscaler likely needs to broaden its product scope, or Palo Alto Networks and CrowdStrike will dominate security through organic growth and acquisitions. Palo Alto grows about 14% organically and mid-20s including acquisitions and, with 4x Zscaler's revenue, commands 10x EV/sales; CrowdStrike, at 2x Zscaler's revenue, gets the same multiple. Scale is being rewarded. 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
CrowdStrike is worth holding through the next cycle because enterprise-scale endpoint security is a fortress every company needs. x.comÂ
Cybersecurity stocks are priced for near-perfect execution. Forward P/Es stand at 201x for Cloudflare, 163x for CrowdStrike, 77x for Palo Alto Networks, 44x for Fortinet, 39x for Okta and 32x for Zscaler. x.comÂ
CrowdStrike and Palo Alto Networks' strength is an ultra-overcrowded trade that is likely to flip this quarter. x.comÂ
SentinelOne appears undervalued relative to its expected revenue growth. Analysts forecast 19.2% NTM revenue growth, versus 23.2% for CrowdStrike, which trades at a premium on forward EV/sales. 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
SentinelOne should be crushed because it offers the same sort of product as CrowdStrike, just worse, and CrowdStrike's flywheel keeps widening the moat between them. The open question is whether cybersecurity is a follow-the-leader market or supports multiple long-term winners, with niche players such as Rubrik and Zscaler and formidable ones such as Cloudflare and Palo Alto Networks. x.comÂ