Zscaler Cybersecurity Stock

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Zscaler Cybersecurity Stock

Zscaler: A Cybersecurity Stock With Upside Potential

Zscaler is a pure-play cybersecurity company. Over the past few years, the Zscaler stock price has declined sharply due to fears of AI disruption. Although the stock has staged a rebound, it is still sitting 45% lower than its yearly high.

However, analysts think the market is wrong about AI disruption fears related to Zscaler. If that's the case, then we can expect a good upside in Zscaler stock in the near future.

Zscaler Secures Network Traffic

What is Zscaler? It is a company that runs a cybersecurity platform. It is used by companies to secure the traffic and access to data and apps. All of the traffic is first passes through cloud platform of the company. The platform decides whether to allow or deny access. It is just like a digital checkpoint that decides whether to allow access or not.

Many people think that Zscaler is competing with CrowdStrike. In reality, CrowdStrike monitors activity on servers, PC, and cloud apps to detect activity with malicious intent. In a nutshell, Zscaler secures the traffic on a network while the CrowdStrike platform secures devices.

The increased usage of AI will definitely increase cyberattacks in the coming years. This represents a great opportunity for a cybersecurity stock like Zscaler.

Reports show that AI agents and other non-human traffic already account for more than 50% of the internet traffic. According to Cloudflare, bot traffic will be 1,000x higher than human traffic in the next 5 years. This increase in AI traffic could mean a huge opportunity for Zscaler, which secures network traffic.

The data from the recent quarter shows that Zscaler's annual revenue has grown by 25% y/y. The company also has a healthy free cash flow.

Now, let's talk about risks. The biggest one is competition from Microsoft and Palo Alto Networks. Also, Zscaler stock is trading at a forward P/E of 42. So, it is not exactly cheap in terms of valuation.

But considering the possible opportunities in the near future, it is clear that you can consider buying Zscaler stock. Of course, Zscaler stock should be a small part of a much bigger and diversified portfolio.

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