Zscaler (ZS) Following Agentic SOC Launch Looks Undervalued But Margin Pressure Clouds The View
How Zscaler’s Agentic SOC shifts the AI security story for investors
Zscaler (ZS) has pushed deeper into AI security with its new Agentic SOC platform, which uses partner models from Anthropic and OpenAI to automate threat detection and response across customer environments.
The launch leans on Zscaler telemetry, a large decoy mesh network and integrated zero trust controls to identify attacks earlier and contain them at machine speed, while still plugging into existing third-party security tools.
Recent trading has been volatile. Zscaler’s share price is up 59.04% over the past 90 days and 19.92% over the last week, yet the year to date share price return is down 10.55% and the 1 year total shareholder return has fallen 32.95%. This suggests short term momentum is rebuilding while longer term holders are still under water as investors weigh the Agentic SOC launch against slower deferred revenue trends and pressure on free cash flow margins.
Scan beyond Zscaler’s Agentic SOC and compare it with hand-picked security and infrastructure peers in our 88 AI infrastructure stocks to see where the next wave of AI-driven defenses is forming.
Zscaler now has a high profile AI security platform and a stock that has surged in the last quarter, while longer term holders are sitting on losses. Does the current valuation respect the business, or does it stretch it?
Most Popular Narrative: 21.1% Undervalued
On the most followed narrative, Zscaler is judged to be worth $250 per share compared with the last close at $197.31. This sets up a very different discussion to the recent share price swings.
The market still largely values Zscaler as a Zero Trust security company. I believe the more important question is whether it becomes a foundational platform for securing enterprise AI.
Fiscal 2026 results showed accelerating ARR growth, record large-customer activity, growing adoption of non-seat-based products, and early evidence that Security for AI is resonating with customers. Security for AI bookings grew more than 50% quarter-over-quarter, while 70% of those wins included Data Security products, suggesting meaningful platform expansion opportunities.
See why 1 investors see Zscaler as 21% undervalued.
Result: Fair Value of $250 (UNDERVALUED)
Still, the Zscaler story can break if demand for Security for AI cools or if slower revenue and free cash flow trends weigh more heavily on sentiment.
Find out about the key risks to this Zscaler narrative.
Another View on Zscaler’s valuation
The first narrative leans on future cash flows and assigns Zscaler a fair value of $250 per share, which frames the stock as 21.1% undervalued versus the last close at $197.31. A different lens tells a more cautious story.
On simple P/S, Zscaler trades at 9.6x. That is far richer than the US software average at 3.8x and sits slightly above the 9.3x fair ratio that our work suggests the market could move toward. If sentiment cools, how much room is there for the multiple to compress before any DCF upside matters to you?
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Mixed signals on Zscaler’s story so far. Act quickly, review the full data and decide where you stand on its 2 key rewards and 1 important warning sign.
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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.
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