Where Could Zscaler’s Next Growth Come From?
Zscaler’s best candidate for upside is a product line that its fiscal 2027 outlook does not call out. The stock has risen 46% over the past three months. It is still 43% below its 52-week high. The outlook matters now because it has revenue growth slowing. It calls for growth of 16.6% to 17.5%, from 25% in fiscal 2026. So which Zscaler (ZS) business could add growth beyond that outlook?
Zscaler’s AI Security Orders Jumped In Fiscal Q4 2026
Zscaler’s best candidate is its security for AI line. The line’s bookings, or newly signed orders, rose more than 50% from the previous quarter in fiscal Q4 2026. Management said that came on top of a strong fiscal Q3. It also reported a 75% rise in the pipeline of AI security deals still being worked on.
Almost all AI security products are priced by usage. The charge follows the AI queries customers run, not the number of users. Zscaler’s products priced by usage form a wider group than AI security alone. In fiscal 2026, that whole group brought in about 30% of the yearly value of new and expanded contracts. Yearly recurring revenue from that group more than doubled from a year earlier. Those figures are strong, but none of them is a revenue figure for AI security.
Where Does AI Security Fit In Zscaler’s Outlook?
Management did not call out AI security’s contribution in the outlook. For scale, Zscaler’s total yearly recurring revenue was $3.8 billion at the end of fiscal 2026. Management said AI is very quickly becoming a strong and durable tailwind for the business. So if AI security grows faster than the outlook allows for, revenue growth could land above it.
Management expects two newer products to scale in the second half of fiscal 2027. They are Zero Trust Exchange for agents and Endpoint AI Security. Both are still possibilities, not results.
A $10,000 holding in Zscaler bought a year ago is worth about $6,790 today. Over the same year, the S&P 500 returned 18.0%. Yet the stock still costs 9.3 times its yearly sales, against 3.1 times for the S&P 500. That price appears to assume Zscaler keeps growing much faster than the average company. For AI security to deliver that growth, Zscaler’s sales team has to sell it through a change of sales leaders.
Can Zscaler Sell Through A Sales Leadership Change?
Zscaler shares fell 8.6% on the morning of September 25. The company had said its chief revenue officer was stepping down. Its head of worldwide sales takes over the role on October 1. Analysts quoted in the press see limited disruption from the change.
Zscaler’s earnings call came before the chief revenue officer news. On that call, management pointed to fiscal Q4 2026, its most productive sales quarter ever. Management also said a sales leadership transition would play out over the first half of fiscal 2027. The outlook reflects that, management said. That record quarter came before the change, so it does not show how sales hold up through it. For a holder, the risk is that the change runs past the first half and slows AI security sales.
Zscaler holds an Investor Day in New York on October 6. Management plans to cover long-term growth drivers and the financial outlook there. Watch that day for a revenue target for AI security.
AI security is still Zscaler’s best candidate for growth beyond its outlook. Until the company gives it a revenue size, the case for it rests on orders, not revenue.
How To Act On ZS?
