Zscaler’s Market Position and Growth Potential
Zscaler (NASDAQ: ZS) is currently trading 45% below its 52-week high, primarily due to market concerns regarding AI disruption. Despite this, the company’s annual recurring revenue grew by 25% year-over-year in the most recent quarter, indicating strong growth potential as the prevalence of AI traffic increases. Zscaler operates a “zero trust” platform that secures access to applications and data, positioning itself advantageously as cyber threats evolve.
Industry experts note that non-human internet traffic, predominantly driven by AI, could grow exponentially, with projections suggesting it may exceed human traffic by 1,000 times within the next five years. This trend could create substantial opportunities for Zscaler, which charges based on traffic and user flow. However, the company faces significant competition from other cybersecurity firms like Palo Alto Networks and Microsoft, and its stock is valued at 42 times forward earnings.
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