Key Takeaways:
- Zscaler is executing a comprehensive platform expansion strategy across AI security, Zero Trust architecture, and data security while maintaining industry-leading growth and profitability metrics.
- Zscaler stock could reasonably reach $372/share by the end of 2028, based on our valuation assumptions.
- This implies a total return of 38% from today’s price of $271/share, with an annualized return of 12% over the next 2.9 years.
Zscaler (ZS) is establishing new benchmarks in the cloud security industry through strategic platform expansion that addresses emerging AI security requirements, comprehensive Zero Trust architecture deployment, and enterprise data protection needs.
Zscaler serves enterprise customers globally through its comprehensive cloud security platform, which spans Zero Trust network access, internet security, data protection, and emerging AI security capabilities.
Core offerings include Zero Trust Everywhere architecture, Data Security Everywhere solutions, and AI security innovations delivered through scalable cloud-native infrastructure.
The cybersecurity leader delivered record Q4 revenue of $719 million, growing 21% year-over-year, with annual recurring revenue surpassing $3 billion to join an exclusive group of only two pure-play SaaS security vendors achieving this milestone.
Zscaler demonstrates exceptional execution across platform expansion initiatives under the leadership of CEO Jay Chaudhry.
It secured nearly 40% of Global 2000 companies and over 45% of Fortune 500 companies, while achieving more than 350 Zero Trust Everywhere enterprise deployments ahead of fiscal 2026 targets.
Zscaler’s strategic transformation focuses on three growth vectors totaling over $1 billion in ARR:
- AI Security addressing emerging threats and agentic operations
- Zero Trust Everywhere is expanding beyond users to branches and cloud workloads, and
- Data Security Everywhere is consolidating multiple point products onto a unified platform
With initiatives including the acquisition of Red Canary for agentless security operations, the Z-Flex program generating over $100 million in bookings, and comprehensive AI security solutions, Zscaler continues to build market leadership while capturing expanding cybersecurity requirements.
The company completed the Red Canary acquisition for approximately $83 million in ARR and maintains a strong balance sheet with $3.6 billion in cash while operating an efficient capital allocation strategy focused on technology innovation and strategic acquisitions.
ZS stock went public in 2018 and has since returned more than 700% to shareholders. Here’s why Zscaler stock could deliver strong returns through 2028 as it capitalizes on AI security opportunities while scaling its Zero Trust and data security platform expansion across its enterprise customer base.
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What the Model Says for ZS Stock
We analyzed the upside potential for Zscaler stock using valuation assumptions based on its platform expansion capabilities and market leadership opportunities across cloud security and emerging AI protection requirements.
Analysts recognize opportunity ahead for Zscaler stock given its proven execution track record, technology innovation leadership, and systematic approach to building competitive advantages while maintaining exceptional growth and profitability metrics in the expanding cybersecurity market.
Zscaler’s diversified platform strategy provides multiple growth vectors while operational excellence validates that strong innovation execution can drive market expansion and customer platform adoption in the rapidly evolving security landscape.
Based on estimates of 20.6% annual revenue growth, 23.6% operating margins, and a normalized P/E valuation multiple of 60.0x, the model projects Zscaler stock could rise from $271/share to $372/share.
That would be a 38% total return, or a 12% annualized return over the next 2.9 years.
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for ZS stock:
1. Revenue Growth: 21%
Zscaler delivered outstanding Q4 performance with 21% revenue growth and 22% ARR expansion, demonstrating platform momentum across expanding security requirements.
Growth drivers include Zero Trust Everywhere expansion with over 350 enterprise deployments, AI security solutions addressing a 3,500% increase in AI/ML transactions, and the Data Security Everywhere platform reaching $425 million in ARR with comprehensive module adoption opportunities.
We used a 21% forecast, reflecting Zscaler’s proven growth trajectory and platform expansion capabilities.
2. Operating Margins: 24%
Zscaler achieved a record Q4 operating margin of over 22% while investing in platform expansion and technology development. It demonstrated operational leverage with a margin expansion of 60 basis points year-over-year and over 1,000 basis points since the first quarter of 2023.
Zscaler expects sustainable margin expansion through operational leverage, platform automation benefits, and improvements in customer success efficiency as enterprise platform adoption scales and security requirements evolve toward comprehensive solutions.
3. Exit P/E Multiple: 60x
Zscaler stock trades at premium multiples reflecting its exceptional growth profile, market leadership position, and technology innovation capabilities across expanding cybersecurity markets.
We maintain premium valuation levels, given Zscaler’s market positioning, innovation leadership, and systematic approach to building sustainable competitive advantages through platform integration and depth in customer relationships for mission-critical security applications.
Long-term competitive advantages from cloud-native architecture, comprehensive platform capabilities, and established enterprise customer relationships should support premium valuations as the company capitalizes on emerging security opportunities and scales its platform expansion initiatives.
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What Happens If Things Go Better or Worse?
Different scenarios for Zscaler stock through 2030 show varied outcomes based on platform execution and cybersecurity market conditions: (these are estimates, not guaranteed returns):
- Low Case: Slower platform adoption and increased competition → 11% annual returns
- Mid Case: Successful platform expansion and market leadership → 17% annual returns
- High Case: Strong AI security momentum and accelerated growth → 24% annual returns
Even in the conservative case, Zscaler stock offers attractive returns supported by a unique market positioning and proven ability to innovate while maintaining exceptional financial metrics across expanding cybersecurity requirements.
The upside scenario for ZS stock could deliver exceptional performance if the company successfully captures the AI security market expansion while maximizing Zero Trust platform adoption and data security consolidation opportunities.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
