Zscaler, Inc. (ZS) Down 4.6% — Time to Drop This From the Portfolio?
Zscaler, Inc. (ZS) is under pressure this Thursday, last changing hands at $243.97 on the NASDAQ, down $11.83 from the prior close of $255.80. The decline pushes the stock further from its 52-week high of $336.99, reached on November 3, 2025. Shares now sit roughly 27.6% below that level. The full 52-week range spans $114.63 to $336.99, and the width of that band shows how unsettled positioning in the name has been over the past year.
Volume has reached roughly 1.84 million shares with the session still open, compared with a 90-day average of about 2.83 million. That puts turnover at around 65% of a typical full day, which leaves room for activity to build before the close.
Why Zscaler, Inc. Price is Moving Lower
The most plausible driver of today's decline is a cybersecurity-sector selloff triggered by Fortinet's outlook. Nothing in Zscaler's own reporting points to a shortfall. Fortinet (FTNT) reported Q3 results on October 28, posting adjusted EPS of $0.91 against a $0.85 estimate and revenue of $2.08 billion versus the $2.06 billion consensus. The headline beat mattered less than the detail beneath it. Service revenue grew just 13%, and the company cut its full-year service-revenue forecast to a range of $5.15 billion to $5.17 billion, down from $5.18 billion to $5.22 billion and below the roughly $5.2 billion analysts had expected. Fortinet shares fell about 25% in early trading, and the damage spread quickly across the group.
Reuters reported early declines of 6% for Palo Alto Networks and 5% for CrowdStrike, which puts Zscaler's 4.62% drop squarely in line with its security peers. Cloudflare, Inc. is off 4.31%, and Atlassian Corporation has fallen 6.92%. Pressure on software more broadly added to the weight. ServiceNow tumbled 18.1% after a quarterly profit miss, which revived concerns about AI disruption across the application and infrastructure software space. A slowdown in subscription-style service revenue at one of the largest security vendors raises questions about enterprise security budgets that investors are now applying to the entire category.
Zscaler's most recent results argue against a company-specific explanation. In its fiscal Q4 2026 report on September 3, Zscaler delivered adjusted EPS of $1.19 against a $1.09 estimate. Revenue came in at $898 million versus the $877 million consensus, up 25% year over year from about $719 million. Management guided fiscal 2027 revenue to $3.908 billion to $3.938 billion and adjusted EPS to $4.86 to $4.90. Those numbers point to a business still compounding at a healthy clip. Still, the stock carries a premium valuation and remains unprofitable on a GAAP basis, which leaves it exposed when the sector reprices on growth fears.
What is the Zscaler, Inc. Rating - Should I Sell?
Weiss Ratings assigns ZS a D- rating. The rating was upgraded on 9/23/2026. Current recommendation is Sell. The upgrade followed the strong fiscal Q4 print, but it moved the stock only into the lowest tier of the D range. That placement reflects a business whose operating momentum has not yet produced the profitability or price stability that would support a higher grade.
The clearest strength is the balance sheet, which is rated Excellent on the Solvency Index. For a company still posting a GAAP loss, that rating matters. It indicates Zscaler can keep funding product expansion into AI security, data protection, and security operations without leaning on outside capital or straining its obligations. The Fair rating on the Growth Index is more qualified. Revenue growth of 24.88% is substantial for a company with a $41.71 billion market cap, and quarterly revenue rose 5.6% sequentially from $850.48 million to $898.19 million. The rating stops short of Good, however, because that top-line expansion has not yet carried through to the bottom line, where earnings per share sit at -$0.40.
Where the picture deteriorates is efficiency. The Very Weak rating on the Efficiency Index captures the gap between Zscaler's adjusted figures and its reported results. Its profit margin stands at -1.88%, and a forward P/E of -633.95 signals that GAAP profitability is not expected in the near term. Heavy stock-based compensation and sales spending continue to absorb the gains from a 25% growth rate. The Total Return Index is rated Fair, which fits a stock that has climbed well off its $114.63 low but now trades about 27.6% below its November 2025 peak. Today's slide also shows why the Volatility Index is rated Weak. A single competitor's service-revenue cut has knocked nearly 5% off a stock that reported a clean beat less than two months ago.
Within the Information Technology sector, Zscaler is on par with Cloudflare, Inc. (NET, D-) and slightly behind Adobe Inc. (ADBE, D+). It sits ahead of Snowflake Inc. (SNOW, E+) and Atlassian Corporation (TEAM, E+). That relative positioning offers limited reassurance when the high-growth software group as a whole carries ratings in Sell territory.
About Zscaler, Inc.
Zscaler, Inc. (ZS) is an Information Technology company that provides cloud security to enterprises worldwide. Incorporated in 2007 as SafeChannel, Inc. and renamed Zscaler in August 2008, the company is headquartered in San Jose, California. Its platform is built around a zero trust model, in which every connection is verified rather than trusted because it originates inside a corporate network. That approach sits at the center of its Zero Trust SASE offering, which securely connects workforces, AI agents, workloads, and IoT and OT devices to cloud applications and AI services.
The core of the portfolio rests on two long-standing products. Zscaler Internet Access delivers advanced threat protection, sandboxing, and a zero trust firewall. Zscaler Private Access provides secure application access, segmentation, application discovery, and attack surface reduction. Around these, the company has layered Zero Trust Browser for third-party and partner access, Zscaler Digital Experience for monitoring end-user performance, and Zero Trust Branch and Zero Trust Cloud for extending protection to offices and workloads. More recent additions include Security for AI, which governs AI adoption across the enterprise, and data security tools spanning AI-powered classification, data loss prevention, SaaS security, and data security posture management.
Zscaler has also expanded into security operations through its Agentic Security Operations solution, which uses AI-powered automation alongside exposure management, deception, managed detection and response, and threat hunting services. The company serves a broad customer base across financial services, healthcare, manufacturing, the public sector and education, telecommunications, energy, and transportation. Its cloud-native architecture, delivered as a service rather than through on-premise appliances, has been the foundation of its competitive position against hardware-rooted rivals. The breadth of that customer base also gives it a deep footprint inside large organizations' security stacks.
Investor Outlook
Zscaler, Inc. (ZS) carries a Weiss Rating of D- (Sell). Today's sector-driven decline is a reminder that solid company results offer little protection when investors start questioning security spending broadly. Investors should watch whether the upcoming fiscal Q1 2027 report confirms the 25% growth pace and keeps the company on track for its fiscal 2027 revenue guidance of $3.908 billion to $3.938 billion. They should also track whether margins move meaningfully toward GAAP profitability. See full rankings of all D- rated Information Technology stocks inside the Weiss Stock Screener.
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