Zscaler: A Cybersecurity Growth Stock Down 44% to Buy Now

In the ever-evolving landscape of cybersecurity, one company has emerged as a leader in zero-trust security: Zscaler (NASDAQ: ZS). Despite a 44% decline from its 2021 high, the company's strong fundamentals and growth prospects make it an attractive investment opportunity for growth-oriented investors.

Zscaler's core strength lies in its AI-driven identity verification and access control. Its Zero-Trust Exchange platform treats every login attempt as hostile, analyzing user credentials, location, and device to ensure only authorized users access sensitive data. This approach has proven effective, stopping over 9 billion security violations daily, highlighting the frequency of potential threats.

The company's expansion into AI protection tools further bolsters its competitive advantage. By restricting AI copilots, chatbots, and virtual assistants' access to sensitive information, Zscaler prevents data leaks and solidifies its position as a leader in zero-trust cybersecurity.

Zscaler's financial performance reflects its strong market position. In its fiscal 2025 first quarter, the company generated a record $628 million in revenue, up 26% year-over-year, driven by strong demand for its AI-powered security solutions. The company's adjusted profit also surged 43% to $124.6 million.



Despite the stock's recent decline, Wall Street remains bullish on Zscaler. Of the 45 analysts covering the stock, 26 have given it a 'buy' rating, with a consensus price target of $224.47, implying a 9% upside. The Street-high target of $270 suggests the stock could climb by 31%.

Geopolitical tensions and cybersecurity concerns have significantly impacted Zscaler's stock performance. As cybercrime continues to rise, with projected damages of $10.5 trillion by 2025, investors are increasingly seeking secure solutions. However, geopolitical tensions, such as those between the U.S. and China, have created uncertainty, contributing to Zscaler's 44% decline from its 2021 high.

In conclusion, Zscaler's AI-driven identity verification and access control, combined with its expansion into AI protection tools, position it well for long-term success in the cybersecurity market. With strong revenue growth and improving profitability, the company is an attractive investment opportunity for growth-oriented investors. Despite the recent stock decline, analysts remain bullish, and the company's P/S ratio of 13.6, significantly below its average of 26.9, indicates potential upside. As cybersecurity concerns continue to grow, Zscaler is well-positioned to capitalize on the increasing demand for secure solutions.