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    Is Zscaler (ZS) Using Sovereign Zero Trust To Deepen Its European Moat Or Just Testing Waters?

    Simply Wall St·07/30/2026 06:21:54
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    • On 28 July 2026, Schwarz Digits and Zscaler announced a partnership to run the Zscaler Zero Trust Exchange on Schwarz Digits’ STACKIT sovereign cloud, creating a Zero Trust SASE service hosted in German data centers for sectors such as public administration, defense, financial services, and healthcare.
    • This collaboration directly targets European data sovereignty and AI-driven cyber risk concerns by offering a cloud-delivered security platform that is operated locally and aligned with regional legal requirements.
    • Next, we’ll examine how this sovereign Zero Trust SASE launch could influence Zscaler’s investment narrative around Zero Trust and AI security demand.

    Find 49 companies with promising cash flow potential yet trading below their fair value.

    Zscaler Investment Narrative Recap

    Zscaler’s story still centers on enterprises shifting to cloud delivered Zero Trust security and AI aware protection, with the main near term catalyst being broader adoption of its platform and the key risk coming from large cloud providers and established security vendors squeezing its pricing power. The STACKIT sovereign Zero Trust SASE launch looks directionally helpful for European data sovereignty demand, but it does not by itself remove the competitive or margin pressure risks.

    Among recent announcements, the June 10 launch of the ZAgent Framework is especially relevant, because it aims to simplify Zero Trust SASE deployment and operations across endpoints, browsers, and cloud workloads. Together with the STACKIT partnership, this reinforces Zscaler’s push to make its platform easier to adopt at scale, which matters if enterprises are cautious on new AI security spend or slow to consolidate away from legacy appliances.

    Yet while this sovereign SASE move looks promising, investors should be aware that tighter IT budgets could still delay Zero Trust branch refresh and AI security upsells...

    Read the full narrative on Zscaler (it's free!)

    Zscaler's narrative projects $5.1 billion revenue and $131.1 million earnings by 2029. This requires 17.1% yearly revenue growth and a $208.5 million earnings increase from -$77.4 million today.

    Uncover how Zscaler's forecasts yield a $192.58 fair value, a 25% upside to its current price.

    Exploring Other Perspectives

    ZS 1-Year Stock Price Chart
    ZS 1-Year Stock Price Chart

    Some of the lowest ranked analysts see a tougher path than consensus, assuming revenue only reaches about US$5.0 billion and earnings around US$611.4 million by 2029, so if you worry that tight budgets could slow Zero Trust and AI security adoption even after the STACKIT news, it is worth comparing their more cautious view with your own expectations.

    Explore 4 other fair value estimates on Zscaler - why the stock might be worth just $192.55!

    Reach Your Own Conclusion

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.