Zscaler, Inc. (ZS): A Bull Case Theory

We came across a bullish thesis on Zscaler, Inc. (ZS) on Hidden Market Gems’ Substack. In this article, we will summarize the bulls’ thesis on ZS. Zscaler, Inc. (ZS)'s share was trading at $ 299.86 as of 11^th June. ZS’s forward P/E was 80.65 according to Yahoo Finance.

Zscaler, a leading cloud security provider, continues to position itself as an indispensable safeguard for enterprise data in an increasingly digital and threat-prone environment. Despite a recent run-up in its stock price—rising from $270 to $296.32—the company still trades below its estimated intrinsic value of $330.87, offering meaningful upside for investors.

Zscaler’s appeal lies in its evolving security ecosystem, bolstered recently by integrations with companies like CrowdStrike, which enhance its platform’s capabilities and competitive moat. As cyber threats grow in volume and sophistication, the demand for zero-trust security architecture and scalable cloud-native protection is only accelerating. While industry heavyweights like Palo Alto Networks remain formidable players, the market for cybersecurity is large and fragmented enough to support multiple winners.

Zscaler’s differentiated focus on securing data traffic between users, devices, and applications—not just the network perimeter—gives it an edge in a cloud-first world. The company’s robust growth trajectory, supported by rising enterprise adoption and its expanding partnerships, positions it as a long-term compounder.

With cybersecurity becoming a boardroom priority, Zscaler’s platform plays a mission-critical role in digital transformation initiatives across industries. The recent pullback had offered an attractive entry point, and even after the recent price appreciation, Zscaler remains undervalued relative to its growth prospects. Investors looking for exposure to a high-quality, scalable software business with a strong tailwind and improving margins may find Zscaler to be a compelling bet in the cybersecurity space.

Previously, we highlighted a bullish thesis on Rubrik (RBRK) by ElectSamsepi0l, which operates in the same industry. The thesis emphasized the company’s post-IPO momentum, strategic partnerships, and its $1B ARR milestone. Both theses highlight differentiated platforms, strong secular growth, and durable margins, but Zscaler’s valuation appears slightly more tempered and rooted in a broader, more mature product ecosystem.

Zscaler, Inc. (ZS) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held ZS at the end of the first quarter which was 52 in the previous quarter. While we acknowledge the risk and potential of ZS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.