ZS AI Stock Analysis – Buy, Hold, or Avoid?
Zscaler, Inc. (ZS)
Zscaler (ZS) offers strong long-term growth potential in cloud security, but ongoing losses, high valuation, and recent volatility warrant caution. While fundamentals and sentiment are improving, technicals remain neutral and valuation is stretched, suggesting investors should hold or accumulate only on significant weakness. The risk/reward profile is moderately positive for patient, risk-tolerant investors, but near-term upside is limited.
Fundamentals
Zscaler demonstrates robust top-line growth alongside healthy gross margins, reflecting strong demand for its cloud-native security solutions. However, persistent operating losses and recent share price volatility indicate ongoing profitability challenges amid heavy investment in R&D and sales. The fundamentals signal resilience and strong market demand but require careful monitoring of path to profitability and cash flow discipline.
Financial Highlights
- Revenue
- Net Income
- Net Margin (%)
Revenue
25.91% YoY
Q4 2025
Net Income
-344.23% YoY
Q4 2025
Net Margin
Q4 2025
Growth Metrics
Revenue Growth YoY
Latest Quarter: Q4 2025
Net Income Growth YoY
Latest Quarter: Q4 2025
Revenue Per Share Growth YoY
Latest Quarter: Q4 2025
EPS Growth YoY
Latest Quarter: Q4 2025
Book Value Per Share Growth YoY
Latest Quarter: Q4 2025
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 815.8M | 788.1M | 719.2M | 678.0M | 647.9M | 628.0M | 592.9M | 553.2M |
| Revenue Growth YoY | +25.91% | +25.50% | +21.31% | +22.57% | +23.41% | +26.42% | +30.30% | +32.09% |
| Net Income | -34.3M | -11.6M | -17.6M | -4.1M | -7.7M | -12.1M | -14.9M | 19.1M |
| Net Income Growth YoY | -344.23% | +3.62% | -18.15% | -121.57% | +72.87% | +64.01% | +51.50% | +141.53% |
| EPS | -$0.21 | -$0.07 | -$0.11 | -$0.03 | -$0.05 | -$0.08 | -$0.10 | $0.13 |
| EPS Growth YoY | -317.50% | +11.39% | -10.55% | -120.46% | +73.53% | +65.65% | +52.62% | +140.63% |
Profitability Metrics
Gross Margin
TTM
Operating Margin
TTM
Net Margin
TTM
Return on Equity
TTM
Return on Assets
TTM
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Gross Margin | 76.55% | 76.56% | 76.14% | 77.01% | 77.09% | 77.34% | 77.94% | 78.47% |
| Operating Margin | -6.35% | -4.61% | -4.48% | -3.31% | -5.71% | -5.08% | -4.33% | -0.80% |
| Net Margin | -4.21% | -1.47% | -2.44% | -0.61% | -1.19% | -1.92% | -2.51% | 3.46% |
| Return on Equity (ROE) | -1.56% | -0.59% | -0.98% | -0.23% | -0.48% | -0.84% | -1.17% | 1.75% |
| Return on Assets (ROA) | -0.62% | -0.22% | -0.30% | -0.08% | -0.17% | -0.28% | -0.35% | 0.52% |
Technical Analysis
Technical indicator data for ZS is currently unavailable; however, recent price action shows a rebound from near 52-week lows with increased volume signaling potential bullish interest. Price is attempting to stabilize with possible formation of consolidation patterns suggesting indecision in the near term.
No extreme reading
Price in downtrend
Strong trend active
50 below 200 - bearish
Key Technical Values
Price with Moving Averages
50-day, 150-day and 200-day simple moving averages
Relative Strength Index
Momentum oscillator measuring speed and magnitude of price changes
RSI (14)
Earnings
Zscaler demonstrates robust top-line growth alongside healthy gross margins, reflecting strong demand for its cloud-native security solutions. However, persistent operating losses and recent share price volatility indicate ongoing profitability challenges amid heavy investment in R&D and sales. The fundamentals signal resilience and strong market demand but require careful monitoring of path to profitability and cash flow discipline.
Latest Earnings
Q4 2025 Earnings (Jan 31, 2026)
Earnings Per Share (EPS)
Actual
$1.01
Estimated
$0.89
Surprise
+$0.12
Surprise %
+12.98%
Revenue
Actual
$815.75M
Estimated
$798.33M
Surprise
+$17.42M
Surprise %
+2.18%
Historical Earnings
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Earnings Per Share | ||||||||
| EPS (Actual) | $1.01 | $0.96 | $0.89 | $0.84 | $0.78 | $0.77 | $0.88 | $0.88 |
| EPS (Estimated) | $0.89 | $0.86 | $0.80 | $0.75 | $0.69 | $0.63 | $0.70 | $0.66 |
| EPS Surprise | +$0.12 | +$0.10 | +$0.09 | +$0.09 | +$0.09 | +$0.14 | +$0.18 | +$0.22 |
| % Diff | +13.0% | +12.1% | +11.2% | +11.7% | +13.5% | +22.2% | +25.0% | +33.9% |
| Revenue | ||||||||
| Revenue (Actual) | $815.75M | $788.11M | $719.23M | $678.03M | $647.9M | $627.96M | $592.87M | $553.2M |
| Revenue (Estimated) | $798.33M | $773.28M | $706.94M | $666.46M | $634.38M | $605.51M | $567.46M | $536.12M |
| Revenue Surprise | +$17.42M | +$14.83M | +$12.28M | +$11.58M | +$13.52M | +$22.44M | +$25.4M | +$17.08M |
| % Diff | +2.2% | +1.9% | +1.7% | +1.7% | +2.1% | +3.7% | +4.5% | +3.2% |
Valuation
Zscaler (ZS) currently presents a challenging valuation scenario characterized by high revenue growth but ongoing net losses and negative earnings multiples. Despite strong top-line growth and a dominant market position in cybersecurity, the stock trades near its 52-week lows with mixed investor sentiment and significant volatility. Analyst consensus remains cautiously optimistic, with most recommending Buy while tempering price targets amid profitability concerns.
Valuation Metrics
Price to Earnings
TTM
Price to Sales
TTM
Price to Book
TTM
Enterprise Value to EBITDA
TTM
Enterprise Value to Revenue
TTM
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Price to Earnings | -232.70 | -1130.38 | -635.58 | -2123.38 | -1007.65 | -572.17 | -450.80 | 339.77 |
| Price to Sales | 39.15 | 66.64 | 62.13 | 51.67 | 48.05 | 43.92 | 45.25 | 46.98 |
| Price to Book | 14.54 | 26.49 | 24.84 | 19.41 | 19.37 | 19.31 | 21.06 | 23.78 |
| Enterprise Value to EBITDA | 1124.87 | 1513.07 | 1270.87 | 879.11 | 2114.54 | 1124.31 | 1156.99 | 586.13 |
| Enterprise Value to Revenue | 39.96 | 67.27 | 61.31 | 50.55 | 47.25 | 43.42 | 44.94 | 46.94 |
Sentiment & Analyst Ratings
Zscaler's market sentiment in early March 2026 is mixed with a cautiously optimistic tilt. Strong revenue growth, robust ARR expansion, and AI security initiatives foster positive views among analysts and some retail investors, but concerns over widening losses, increased spending, and technical bearish signals temper enthusiasm. Overall, sentiment reflects a balance between growth potential and near-term financial challenges.
Analyst Recommendations
Risk Assessment
Zscaler currently demonstrates a solid liquidity position and moderate leverage, which supports operational stability amid competitive pressures. However, the firm faces considerable execution and market risks, including intense competition in the AI security space and integration challenges from recent acquisitions. Investors should weigh these risks against the company's growth potential in a rapidly evolving cybersecurity landscape.
Liquidity & Solvency
Current Ratio
Latest Quarter: Q4 2025
Quick Ratio
Latest Quarter: Q4 2025
Debt-to-Equity
Latest Quarter: Q4 2025
Debt-to-Assets
Latest Quarter: Q4 2025
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Liquidity Metrics | ||||||||
| Current Ratio | 1.90 | 1.82 | 2.01 | 1.24 | 1.20 | 1.15 | 1.09 | 1.75 |
| Quick Ratio | 1.90 | 1.82 | 2.01 | 1.24 | 1.20 | 1.15 | 1.09 | 1.75 |
| Solvency Metrics | ||||||||
| Debt-to-Equity | 0.85 | 0.93 | 1.00 | 0.68 | 0.77 | 0.87 | 0.97 | 1.13 |
| Debt-to-Assets | 0.28 | 0.28 | 0.28 | 0.23 | 0.25 | 0.26 | 0.26 | 0.29 |
Liquidity Assessment
Current Ratio: 1.90(Strong)
Quick Ratio: 1.90(Strong)
The company has strong liquidity with sufficient short-term assets to cover liabilities.
Solvency Assessment
Debt-to-Equity: 0.85(Moderate)
Debt-to-Assets: 0.28(Low)
The company maintains a balanced capital structure with manageable debt levels.
Frequently Asked Questions about ZS
AI Answers: Common Questions About ZS
Get AI-powered answers to the questions investors ask most about Zscaler, Inc.
ZS is not a clear buy at current levels ($154.67), as it trades near 52-week lows but remains overvalued with a negative P/E of -618.68 and high P/S multiples. While long-term growth prospects are strong, investors should wait for technical confirmation or further margin improvement before adding.
There is no urgent reason to sell if you already hold, as fundamentals are improving and sentiment is stabilizing. However, if you are risk-averse or need liquidity, the lack of near-term profitability and technical uncertainty may justify trimming positions.
The biggest risks are persistent net losses (net margin -1% to -6%), high leverage (debt/equity ~0.85), and intense competition from larger cybersecurity firms. Execution on AI strategy and integration of acquisitions are also key risk factors.
Short-term resistance is at $156, with support at $140; a breakout above $156 could target $170. Analyst targets have been reduced but remain above current price, reflecting cautious optimism if profitability improves.
ZS is currently overvalued with a negative P/E (-618.68), very high P/S and EV/EBITDA ratios, and trades at a premium to both sector peers and its own historical averages. The market is pricing in aggressive future growth that has yet to materialize.
Fundamentally, ZS is strong on revenue growth (23.3% YoY) and gross margins (76-78%), with a solid liquidity position (current/quick ratio ~1.9). However, ongoing operating losses and negative net margins mean profitability is not yet achieved.
Technical analysis is neutral: price has bounced off $140 support with increased volume, but remains below $156 resistance and well under 52-week highs. No clear bullish or bearish trend is confirmed; traders should wait for a breakout or retest of support.
Key catalysts include upcoming earnings reports, progress toward profitability, AI and Zero Trust product launches, and macroeconomic trends affecting IT security spending. Watch for news on major partnerships or customer wins.
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