Zscaler, Inc. (ZS) stock has declined by 38.5% over the past six months, underperforming the Computer and Technology sector. Compared to competitors like Cisco Systems (CSCO) and Fortinet (FTNT), Zscaler’s drop is more pronounced. Despite macroeconomic challenges and high valuations, Zscaler’s financial performance remains strong, with impressive revenue growth and a growing customer base.

Zscaler has a premium valuation with a Forward 12-month P/S ratio of 7.49, higher than the sector average. However, it trades at a lower multiple than Palo Alto Networks (PANW) and Fortinet, but higher than Cisco Systems. The company’s focus on large-scale enterprise deals and innovation pipeline is expected to drive growth in 2026 and beyond.

Zscaler is investing heavily in AI Security, Zero Trust Everywhere, and Data Security Everywhere, which have collectively crossed $1 billion in ARR. The company is leading in AI security, with a focus on AI Guard and agentic operations. The Z-Flex program is driving strategic multi-year deals, with significant contract value bookings. These initiatives are expected to fuel long-term growth for Zscaler.

Despite challenges, Zscaler’s investment in AI, innovative cybersecurity capabilities, and growing adoption of its solutions make the stock worth holding. The company’s strong financial performance and strategic initiatives position it well for future growth and success in the cybersecurity space.

Read more at Nasdaq: Zscaler Stock Dips 38% in Six Months: Should You Hold or Exit?