SAN JOSE, California, May 2, 2026, 08:02 (PDT)
- Zscaler shares jumped 6.99% to finish at $139.81 on May 1, notching another gain for software and cloud-security stocks that have been battered in recent weeks.
- Nasdaq Composite finished above 25,000 for the first time, powered by gains in tech stocks.
- The bounce wasn’t enough to quiet concerns. Analysts remain skeptical about competition in secure access service edge, or SASE—a cloud setup blending network access and security screening.
Zscaler Inc surged almost 7% Friday, snapping back after a rough stretch for software names. Shares finished the session at $139.81, a gain of $9.13, on roughly 2.9 million traded, according to company market data.
The timing’s important here. Zscaler rallied as tech stocks broadly rebounded, not because of any big company reveal, so the move is really a gauge of sentiment rather than a fresh read on the company’s prospects. According to Barchart, Zscaler’s early gains tracked stronger earnings and upbeat forecasts from fellow software names like Atlassian, giving a lift to the broader software-as-a-service crowd—firms selling cloud-based rentals.
Atlassian bumped up its full-year revenue growth outlook to roughly 24%, thanks to a pickup in cloud demand and increased adoption of AI tools, Reuters said. The boost has prompted a new wave of interest in software stocks, following a stretch where investors worried AI might erode the worth of legacy subscription models.
Zscaler’s stock remains well under the peaks it hit last year. The company’s market cap sits near $22.5 billion, according to Google Finance, with shares having swung from a 52-week high of $336.99 all the way down to $114.62. Even with Friday’s gains, much of the ground lost hasn’t been recovered.
Wall Street’s signals are all over the place. According to StockAnalysis, Citizens analyst Rustam Kanga kept his Buy on Zscaler as of May 1, yet he slashed his price target to $210 from $290. The consensus rating still sits at Buy. Morgan Stanley, for its part, shifted to Hold in April and dropped its target to $155, the same data shows.
Supporters had something to point to after the company’s most recent results. Zscaler logged a 26% jump in fiscal second-quarter revenue, reaching $815.8 million. Annual recurring revenue climbed 25%, hitting $3.36 billion. The company nudged up its full-year fiscal 2026 guidance, now forecasting revenue between $3.31 billion and $3.32 billion, with annual recurring revenue projected at $3.73 billion to $3.75 billion.
CEO Jay Chaudhry describes the company as a “cybersecurity platform for the AI age,” arguing that as customers embrace AI, the need for securing users, data, and applications only grows. CFO Kevin Rubin called out 25% ARR growth and highlighted record non-GAAP operating margin profitability, with some accounting costs carved out. Zscaler, Inc.
Still, cracks show beneath the surface. Zscaler booked a GAAP net loss of $34.3 million for the second quarter, a drop deeper than last year’s $7.7 million loss. Organic ARR growth—stripping out the Red Canary deal—came in at 21%, trailing the top-line number.
Competition isn’t letting up. BTIG cut its rating on Zscaler back in April, citing field checks that pointed to a more cautious tone for the next six to 12 months. Cloudflare and Netskope came up as key names in the mix, flagged as notable rivals. BTIG also pointed out that firewall vendors have gotten better at pitching SASE features to their own customers, which could make it tougher for Zscaler to win new business.
The bigger AI issue continues to hang over the sector. Back in February, Reuters flagged a selloff in U.S. software and data-services stocks, with investors spooked by the prospect of rapid-fire AI developments shaking up the industry. Goldman Sachs chief U.S. equity strategist Ben Snider called short-term earnings “important signals of business resilience,” but stopped short of saying they’d erase long-term risk. Reuters
Zscaler has flagged these risks for investors before. Its most recent quarterly filing pointed to fierce and growing competition as a threat to market share. Sluggish customer renewals or any slowdown in customers picking up its cloud platform could weigh on results down the line. The same filing also called out potential regulatory, operational, and reputational hazards tied to AI and machine learning.
Friday’s climb buys Zscaler a little space. Next up: management has to keep revenue growth north of 20%, hold the line on SASE pricing, and prove that AI actually drives up demand for its zero-trust platform—which authenticates users and devices before letting them in—instead of nudging customers to look elsewhere.
