Zscaler Says Agentic AI Could Be Its Biggest Opportunity Ever

Zscaler, Inc. (NASDAQ:ZS) stock traded higher Tuesday after the company reaffirmed its first-quarter and fiscal 2027 outlook at its Investor Day.

The cybersecurity company maintained guidance that remains above analyst estimates. Management also highlighted artificial intelligence as a major long-term growth opportunity.

The stock also received support from recent analyst optimism and Zscaler’s collaboration with IBM and Red Hat, announced Monday.

Zscaler Reaffirms Fiscal 2027 Outlook

For the first quarter, Zscaler expects revenue of $935 million to $939 million. That represents growth of about 19% year over year and is above the $927.024 million estimate.

The company expects non-GAAP earnings of $1.15 to $1.16 per share, above the $1.08 estimate.

Zscaler also forecasts non-GAAP operating income of $215 million to $217 million. That implies an operating margin of about 23%.

For fiscal 2027, the company reaffirmed revenue guidance of $3.908 billion to $3.938 billion. The outlook implies growth of 16.6% to 17.5% and remains above the $3.899 billion estimate.

Zscaler expects annual recurring revenue, or ARR, of $4.396 billion to $4.426 billion.

Non-GAAP earnings are expected to reach $4.86 to $4.90 per share, above the $4.60 estimate.

The company also forecasts non-GAAP operating income of $924 million to $932 million and a free cash flow margin of 23% to 23.5%.

Zscaler Targets $10 Billion in ARR

CEO Jay Chaudhry said the rise of agentic AI could become one of the biggest opportunities in Zscaler’s history.

He said the company’s Zero Trust platform is designed to defend against AI-driven threats, protect sensitive data and help companies deploy AI more securely.

The platform can also reduce attack surfaces and limit the ability of threats to move across corporate networks.

Chaudhry said Zscaler’s customer growth flywheel and multiple growth engines could help the company capitalize on AI tailwinds and move toward its $10 billion ARR target.

Zscaler Expands AI Security Partnerships

On Monday, Zscaler announced a collaboration with International Business Machines Corporation (NYSE:IBM) and Red Hat.

The companies aim to help protect private applications during the period between the disclosure of a software vulnerability and the deployment of a patch.

The collaboration combines Zscaler Autonomous Application Shield with IBM and Red Hat’s Lightwell technology. The offering provides real-time, application-specific protection while software fixes are developed, tested and deployed.

Analysts Maintain Bullish Outlook

The stock has a Buy consensus rating, with an average price forecast of $216 from 50 analysts.

Scotiabank raised its target to $240 while maintaining Sector Outperform on Oct. 5. Barclays raised its target to $220 with an Overweight rating on Sept. 29, while Wedbush maintained Outperform with a $215 target on Sept. 28.

ZS Price Action: Zscaler shares were up 3.03% at $207.92 at the time of publication on Tuesday, according to Benzinga Pro data.

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