Zscaler (NASDAQ: ZS) is facing a significant disconnect between its growth potential and current market perception, with the stock down over 36% in 2026 despite a consensus buy rating from analysts. The median price target of $220 suggests a potential upside of more than 52%, while the most bullish target reaches $335, indicating a possible 133% increase. Concerns about AI disrupting Zscaler’s business model have weighed heavily on the stock, but the company is positioning itself to capitalize on AI-driven demand for enhanced cybersecurity solutions.
As enterprises increasingly adopt AI technologies, new vulnerabilities emerge, creating opportunities for Zscaler’s AI Protect suite. The company’s recent performance reflects this momentum, with a 26% year-over-year revenue increase to $816 million in its fiscal Q2 and a 25% rise in annual recurring revenue. Valued at just 7.3 times sales—well below its five-year average—Zscaler’s current stock price does not reflect its potential to benefit from the growing need for real-time security in AI interactions.
Investors should consider Zscaler’s strong fundamentals and strategic positioning as AI adoption accelerates. With a robust platform that processes over 500 billion transactions daily, Zscaler is poised to regain market confidence and potentially see its valuation multiples expand, driving the stock price higher.
Source: fool.com