Zscaler (ZS): Cloud Security Leader Poised for a Breakout in 2025

In an era where cyber threats evolve faster than ever, Zscaler (NASDAQ: ZS) has positioned itself as a leading force in cloud-based cybersecurity. The company’s Zero Trust architecture and AI-driven threat detection solutions have fueled rapid growth, and recent developments suggest a potential breakout in 2025. Let’s dissect the catalysts, financial health, and technical signals driving this momentum.

Financial Momentum: Growth Amid Volatility

Zscaler’s first-quarter fiscal 2025 results (ended October 2024) underscore its resilience. Revenue surged 26% year-over-year to $628 million, while non-GAAP net income jumped to $124.3 million—a 44% increase. The company’s calculated billings grew 13% to $516.7 million, and deferred revenue hit $1.78 billion, up 27% YoY. These figures reflect strong customer retention and demand for its cloud-native security solutions.

The scalability of its platform is staggering: Zscaler now processes over 500 billion daily transactions, far exceeding Google’s 8.5 billion daily searches. This milestone validates its ability to handle enterprise-scale workloads, a key differentiator in the cybersecurity market.

Strategic Partnerships: Fueling Expansion

Zscaler’s breakout potential is amplified by high-profile partnerships:
1. CrowdStrike Integration: Combining Zscaler’s cloud security with CrowdStrike’s endpoint protection creates a unified defense against AI-driven attacks. This collaboration addresses the 45% YoY rise in IoT malware detected by Zscaler’s ThreatLabz.
2. Okta Integrations: Four new integrations enable Zero Trust transformation, merging identity and access management with network security. This reduces attack surfaces while improving user experience.
3. T-Mobile Collaboration: Their hybrid zero-trust model is replacing traditional VPNs for 20 million T-Mobile users, expanding Zscaler’s enterprise footprint.

These partnerships not only diversify revenue streams but also position Zscaler at the forefront of the $270 billion cybersecurity market, which is projected to grow at a 9% CAGR through 2030.

Technical Analysis: Bullish Signals Ahead

Technical indicators paint a bullish picture for ZS in 2025:
- Moving Averages: All daily and weekly SMAs/EMAs (3-day to 200-day) are in buy territory, with shorter-term averages above longer-term ones. The 50-day SMA ($201.15) and 200-day SMA ($192.38) suggest upward momentum.
- RSI (14-Day): At 70.46, ZS is “overbought” but not extreme. Historically, ZS has sustained RSI above 70 during growth phases.
- Price Projections: Analysts forecast a $214.07 monthly average for May 2025, with a high of $240.64. A $456.63 peak by November 2025 could deliver a 101.9% ROI from current prices.

While short-term volatility (5.46% over 30 days) exists, the $226.25 May 2025 starting price is a strategic entry point. Analyst upgrades—like BNP Paribas’ “Outperform” call—add credibility, especially with $214.59 average price targets from 24 analysts.

Risks and Considerations

• Valuation Concerns: ZS trades at a P/E of -441.51 due to net losses, though non-GAAP profitability is improving.
• Insider Selling: Executives sold $3.7 million in shares in late 2024, which may spook short-term traders.
• Competitive Landscape: Rivals like Palo Alto Networks and CrowdStrike are aggressive in AI security.

Conclusion: A Breakout in the Making

Zscaler’s combination of financial strength, strategic partnerships, and technical bullishness makes it a compelling investment for 2025. Key data points reinforce this:
- Revenue Growth: 26% YoY in Q1 FY2025, with a full-year target of $2.62 billion.
- Technical Indicators: All SMAs/EMAs in buy zones, RSI above 70 without extreme overbought conditions.
- Analyst Consensus: 24 analysts rate it “Buy” or higher, with a 27% upside to average targets.

While risks like insider selling and valuation remain, ZS’s dominance in cloud security and AI-driven innovation positions it to outperform. Investors should buy on dips below $210 and hold for the $450+ potential by late 2025. For those prioritizing growth, Zscaler is a breakout candidate to watch closely in the coming quarters.

Final Takeaway: Zscaler’s trajectory mirrors that of industry disruptors—strong fundamentals, strategic alliances, and technical strength align for a sustained upward move. The cloud security leader is primed to capitalize on rising enterprise IT budgets and the global shift to Zero Trust architectures.