• Zscaler reaffirmed its fiscal 2027 outlook after the October 2026 update, guiding first quarter revenue to US$935 million to US$939 million and full year sales to US$3.908b to US$3.938b, while also highlighting an expanded collaboration with IBM and Red Hat on private application security.
• The partnership with IBM and Red Hat centers on closing the vulnerability to patch gap for private applications. This speaks directly to Zscaler’s push to tie its Zero Trust Exchange and AI driven security tools to practical, high priority customer pain points rather than just adding more products.
• The next step is an assessment of how Zscaler's reaffirmed revenue guidance could influence the longer term investment narrative that investors are using today.

Spot opportunities in other cybersecurity and AI-driven platforms by scanning our hand-picked 55 AI infrastructure stocks alongside Zscaler's reaffirmed guidance and its new collaboration with IBM and Red Hat.

Zscaler Investment Narrative Recap

To stay a shareholder in Zscaler, you need to believe the cloud security platform can turn its large product footprint, especially Zero Trust and Security for AI, into steady ARR expansion even as headline growth slows. The reaffirmed fiscal 2027 outlook around 17% revenue growth keeps that path intact rather than changing the story.

The key near term catalyst is the upcoming fiscal Q1 print and any read on ARR resilience, AI security traction and customer churn from the Red Canary MDR base. The biggest risk remains that growth settles closer to mid teens and AI plus SecOps upsell fails to offset drag from slower expansions or weaker migrations.

The collaboration with IBM and Red Hat on protecting private applications is the clearest operational tie in to the current narrative. It directly connects Zscaler’s Zero Trust Exchange and Autonomous Application Shield to a specific security problem: the gap between a new vulnerability being disclosed and patches being rolled out.

For you as an investor, this matters because it tests execution on two fronts at once. It shows whether Zscaler can turn AI driven security for private apps into meaningful ARR, and whether large partners help create a pipeline that supports the guidance range and offsets the risk from slowing overall growth.

Zscaler's narrative projects US$5.3b revenue and US$178.3 million earnings by 2029. This assumes 16.7% yearly revenue growth and an earnings increase of about US$241.5 million from a loss of US$63.2 million today.

Uncover why Zscaler's fair value indicates a 10% potential upside to its current price, which could close faster than many investors expect.

Exploring Other Perspectives

One alternate view puts much more weight on margin risk from AI rich products. The most bearish analysts were only modeling about US$5.3b revenue and US$16.2 million earnings by 2029, with a P/E near 2,364x. That is a sharply different story. The reaffirmed guidance and IBM and Red Hat collaboration may eventually shift those assumptions.

Explore 4 other Zscaler fair value estimates, including one that suggests it could be worth just $233.38.

The Verdict Is Yours

Don't just follow the ticker; dig into the data and build a conviction that's truly your own.

• A great starting point for your Zscaler research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• See our latest analysis for Zscaler. The report includes a comprehensive fundamental analysis summarized in a single visual, the Snowflake, making it easy to evaluate Zscaler's overall financial health at a glance.

Looking for more investment ideas beyond Zscaler?

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• If you prefer to hunt for underfollowed prospects, scan through 20 high quality undiscovered gems that may not be front page news yet but still meet disciplined quality checks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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