Zscaler Slides to 412th in Liquidity Amid Cybersecurity Sector's AI and Buyback Arms Race

Zscaler (ZS) closed August 25, 2025 with a 1.05% decline, trading on $220 million in volume that ranked it 412th in market liquidity. The move follows broader sector pressures amid competitive dynamics in the cybersecurity landscape.

Fortinet’s recent $1 billion share repurchase expansion has intensified scrutiny on capital allocation strategies within the cybersecurity sector. While the update highlights Fortinet’s $3.37 billion cash reserves and 14% revenue growth, it also underscores the sector’s maturity phase as hardware refresh cycles near saturation. This context amplifies competitive pressures for Zscaler, which faces a market environment where established players are doubling down on buybacks and AI integration to reinforce market positions.

Strategic shifts toward AI-driven security solutions are reshaping the industry. Fortinet’s AI-powered security suite, including 500+ patents and platform-wide AI integration, signals a broader trend of technological differentiation. For Zscaler, this environment demands accelerated innovation to maintain its zero-trust architecture edge, particularly as competitors like CrowdStrike and Check Point consolidate partnerships and refine their offerings.

Valuation concerns persist across the sector. Fortinet’s Price-to-Book ratio of 29.7x exceeds industry averages, reflecting elevated expectations already priced into many cybersecurity stocks. Zscaler’s own valuation metrics remain sensitive to macroeconomic factors and capital market sentiment, creating a risk-reward profile that favors disciplined capital deployment strategies.

A backtest of a high-volume trading strategy from 2022 to 2025 showed 0.98% average daily returns with 31.52% total gains over 365 days. The approach generated 7.02% returns in June 2023 but suffered -4.65% losses in September 2022, illustrating the volatility inherent in short-term liquidity-based trading strategies.