ZS · Zscaler

The thesis

Zscaler's business is still tracking guidance, but the shares have lost the investor-day rally in a market-wide sell-off. They closed at $194.92 on 10 November 2026. The first-quarter fiscal 2027 report on 2 December 2026 decides the case. It shows whether revenue beats the $935–939 million guide and whether the full-year range goes up.

Nothing about the company has changed since the 29 October note. Zscaler has not changed guidance since its 6 October investor day. The new facts are the fall in the share price and a confirmed report date. On 5 November the company set the release for after the close on Wednesday, 2 December.

The shares fell from $255.80 on 28 October to $194.92 on 10 November. GuruFocus reported a 5.9% fall to $223.79 on 2 November. On 5 November the shares closed down 9.16% at $203.88, while the S&P 500 fell 4.36% and the Nasdaq fell 5.52% (Zacks via Yahoo Finance). High-valuation software fell harder than the index, and Zscaler fell harder than both.

The rating stays at more likely to lag the S&P 500 than lead it over three months. The drop removes the earlier problem of a price above the analyst consensus. But the shares are falling faster than a falling market, and the report is three weeks away. The story is well known: the story became widely known when CNBC's Halftime Report named Zscaler a final trade on 22 October, and since Fortinet's 28 October report the shares have moved with peer results and the market, not with company news.

Bullish and bearish views on Zscaler, Inc.

The bull case on Zscaler, Inc. (ZS), in brief: the last quarter beat guidance clearly. The bear case: the shares fall harder than the market.

Bull case

• The last quarter beat guidance clearly. Fourth-quarter fiscal 2026 revenue was $898.2 million, up 25%, against guidance of $875–878 million. Net new annual recurring revenue (ARR) was $246 million (3 September 2026 release).
• Guidance was reaffirmed at investor day. The 6 October 2026 release, filed on Form 8-K, kept first-quarter revenue at $935–939 million, about 19% growth, and non-GAAP earnings per share (EPS) at $1.15–1.16. Fiscal 2027 revenue guidance is $3.908–3.938 billion.
• The price now sits below the consensus target. MarketBeat's consensus target was $236.65 as of 9 November 2026, above the $194.92 close on 10 November. In October the shares traded above consensus.
• Analyst estimates are holding. Zacks put first-quarter consensus at EPS of $1.16 and revenue of $937.56 million on 5 November 2026, inside the company's guide. Its EPS consensus rose 0.08% over the prior month.
• Partnerships keep extending the AI-security product. Commvault and Zscaler announced a strategic partnership for AI security on 10 November 2026. On 21 October Zscaler said its Zero Trust Exchange supports Nvidia's OpenShell Reference Architecture for AI agents (Benzinga).
• Contracted backlog is large. Remaining performance obligations were $7,365.4 million at 31 July 2026, with 45% expected to be recognised within 12 months (fiscal 2026 Form 10-K).

Bear case

• The shares fall harder than the market. On 5 November 2026 Zscaler fell 9.16% against a 4.36% drop in the S&P 500 (Zacks). A risk-off market hits the most expensive software names first.
• A peer cut its subscription outlook. Fortinet lowered its service-revenue forecast on 28 October 2026, and its shares were down 25.6% after hours (StockTitan). Fortinet competes with Zscaler in secure access.
• Guided growth is slowing. First-quarter revenue guidance implies about 19% growth, against 25% in the fourth quarter of fiscal 2026 (company releases, 3 September and 6 October 2026).
• Not every analyst sees upside. Morgan Stanley rates the shares Equal Weight with a $185 target (MarketBeat, 15 October). DA Davidson started at Neutral with a $215 target on 21 October, citing competition in user-based secure access (Benzinga).
• Reports have often been sold. Trefis counted declines in the two sessions after 5 of the last 6 reports (25 October 2026).
• Sales leadership changed this quarter. Chief revenue officer Mike Rich left on 25 September 2026, and Ross Tackett has led sales since 1 October. The first quarter is the first under the new sales chief.

Price setup

The shares closed at $194.92 on 10 November 2026, according to adjusted daily closes. That is 41.2% below the 52-week high of $331.29 and 3.6% above the level of three months earlier. The 14-day relative strength index (RSI) was 31.8, near the 30 level often read as oversold.

The nearest reference is $193.05, the 25 September 2026 close after the sales-chief departure. A weekly close below it would erase the whole rally that followed the 6 October investor day. The 28 October close of $255.80 marks where the decline began.

There is no sign of crowding from the price. The shares trade well below their recent highs, and the CNBC attention of 22–23 October has faded. The imminent report is the main concentration of risk.

Catalysts ahead

• ~18 November 2026 (est.): Palo Alto Networks fiscal first-quarter results. Shows whether Fortinet's service-revenue cut reflects broad security-spending weakness or one company's slowdown.
• 2 December 2026: Zscaler first-quarter fiscal 2027 results, after the close. Shows whether revenue beats the $935–939 million guide, whether net new ARR holds under the new sales chief, and whether the fiscal 2027 range rises; it decides the case.

What would change the view

A daily close above $260.45, the highest close of the last 20 sessions (26 October 2026), would show the shares leading the S&P 500 and prove this call wrong.

What it trades with

Zscaler trades with listed security peers. Benzinga reported after-hours drops of roughly 5% to nearly 10% in Zscaler, Palo Alto Networks, CrowdStrike, Okta and SentinelOne after Fortinet's 28 October 2026 report. It also trades as a high-valuation software name: on 5 November it fell 9.16% against a 5.52% drop in the Nasdaq (Zacks). Peer reports and broad market moves currently drive the shares more than company news does.