Comparing Long-Term Investment Prospects of Okta and Zscaler
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
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Should l Buy ZS?
Source: Fool
- Okta Financial Performance: Okta reported a 12% year-over-year revenue increase for fiscal 2026, nearing $3 billion, but its revenue growth forecast for 2027 has declined to 9%, indicating a slowdown that may affect investor confidence.
- Zscaler's Strong Growth: Zscaler reported $815.8 million in revenue for Q2 of fiscal 2026, a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, and it expects 24% revenue growth for the full year, showcasing robust market performance.
- Market Valuation Comparison: While Okta's stock has dropped 30% in the past year, it may be undervalued, whereas Zscaler's stock has also fallen over 20%, but its forward P/E ratio remains above 40, indicating market attractiveness.
- AI Impact and Competition: Okta faces growth challenges due to AI disruptions, while Zscaler is proactively collaborating with AI to launch AI-driven security products, enhancing its competitive edge, making Zscaler a more favorable long-term investment.
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Analyst Views on ZS
Wall Street analysts forecast ZS stock price to rise
30 Analyst Rating
24 Buy
6 Hold
0 Sell
Strong Buy
Current: 155.400
Low
260.00
Averages
325.62
High
390.00
Current: 155.400
Low
260.00
Averages
325.62
High
390.00
About ZS
Zscaler, Inc. is a cloud security company. The Company has developed a platform incorporating core security functionalities needed to enable fast and secure access to cloud resources based on identity, context and an organization’s policies. Its Zscaler Zero Trust Exchange platform protects thousands of customers from cyberattacks and data loss by securely connecting users, devices, and applications in any location. Its solution is a purpose-built, multi-tenant, distributed cloud platform that incorporates the security functionality needed to enable users, applications, and devices to safely and efficiently utilize authorized applications and services based on an organization’s business policies. It delivers its solutions using a software-as-a-service (SaaS) business model and sells subscriptions to customers to access its cloud platform, together with related support services. It offers a security platform that combines its platform with automated security operations.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Financial Performance Analysis of Okta and Zscaler
- Okta Revenue Growth: Okta reported a 12% year-over-year revenue increase for fiscal 2026, nearing $3 billion in subscription revenue, demonstrating resilience in the market despite facing threats from artificial intelligence.
- Zscaler Financial Performance: Zscaler's second-quarter revenue for fiscal 2026 reached $815.8 million, reflecting a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, showcasing its competitiveness in the rapidly expanding cybersecurity market.
- Changing Growth Expectations: Okta anticipates a slowdown in revenue growth to 9% for fiscal 2027, while Zscaler has revised its fiscal 2026 revenue growth forecast upward to 24%, indicating a stronger growth trajectory for Zscaler in the market.
- Investment Value Assessment: Although Okta's stock has dropped 30%, it may be undervalued, while Zscaler's stock has also declined by 20%, yet its financial metrics present a more appealing investment opportunity, particularly in AI-driven security products.
See More
Comparing Long-Term Investment Prospects of Okta and Zscaler
- Okta Financial Performance: Okta reported a 12% year-over-year revenue increase for fiscal 2026, nearing $3 billion, but its revenue growth forecast for 2027 has declined to 9%, indicating a slowdown that may affect investor confidence.
- Zscaler's Strong Growth: Zscaler reported $815.8 million in revenue for Q2 of fiscal 2026, a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, and it expects 24% revenue growth for the full year, showcasing robust market performance.
- Market Valuation Comparison: While Okta's stock has dropped 30% in the past year, it may be undervalued, whereas Zscaler's stock has also fallen over 20%, but its forward P/E ratio remains above 40, indicating market attractiveness.
- AI Impact and Competition: Okta faces growth challenges due to AI disruptions, while Zscaler is proactively collaborating with AI to launch AI-driven security products, enhancing its competitive edge, making Zscaler a more favorable long-term investment.
See More
Comparing Investment Prospects: Okta vs. Zscaler
- Okta Financial Performance: In fiscal year 2026, Okta achieved a 12% year-over-year revenue increase, reaching nearly $3 billion, yet its revenue growth forecast for 2027 has declined to 9%, indicating a slowdown that could impact its long-term investment appeal.
- Zscaler Strong Growth: Zscaler reported $815.8 million in revenue for Q2 of fiscal 2026, marking a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, and it expects 24% revenue growth for the full year, demonstrating financial health and market competitiveness.
- Market Valuation Changes: While Okta's stock has dropped 30% over the past year, its current valuation may be undervalued, whereas Zscaler's stock has also fallen over 20%, but its forward P/E ratio exceeds 40, reflecting market confidence in its future growth.
- AI Impact and Strategic Positioning: Facing growth challenges due to AI, Okta's deceleration is concerning, while Zscaler's collaboration with AI to develop security products showcases its stronger market adaptability, potentially giving it an edge in future competition.
See More
AI Disruption in Cybersecurity Sector
- Market Disruption: Anthropic's Claude Cowork has demonstrated the potential of generative AI applications to gradually displace many enterprise SaaS companies, leading analysts to reevaluate the current earnings value of these stocks and causing market turbulence.
- Cybersecurity Threat: The launch of Claude Cybersecurity, which scans codebases and suggests AI-generated fixes, poses a short-term threat to cybersecurity stocks but highlights the increasing importance of cybersecurity in the AI era, potentially prompting enterprises to increase security investments.
- Palo Alto Networks Expansion: Palo Alto Networks has enhanced its identity security services through the acquisition of CyberArk, aiming to become a one-stop solution for enterprise cybersecurity needs; despite traditional hardware business dragging overall growth, next-generation software service revenue grew by 33% year-over-year.
- ZScaler Transformation: ZScaler's launch of the AI Protect service supports secure AI usage in networks, and its shift from user-based to usage-based pricing has driven non-seat revenue growth of over 100% year-over-year, indicating strong growth potential in the cloud computing era.
See More
AI Stocks Sell-Off: Investors Eye Discounts Amid Valuation Concerns
- SentinelOne Performance: Despite a significant drop in 2022, SentinelOne reported $1 billion in revenue for fiscal 2026, marking a 22% year-over-year increase, with a projected 20% growth for fiscal 2027, indicating its ongoing growth potential in the AI sector.
- Cash Flow Position: The company generated approximately $52 million in free cash flow in fiscal 2026, ensuring it can raise funds without diluting shareholder equity, which enhances investor confidence.
- Adobe Financial Metrics: Adobe achieved $6.4 billion in revenue for Q1 fiscal 2026, a 12% increase year-over-year, and despite competitive pressures and a spike in tax expenses, net income reached $1.9 billion, showcasing its financial robustness.
- Valuation Appeal: With a P/E ratio of 15 and a forward P/E of 11, Adobe's current stock price of $246.09 presents a potential value buying opportunity for investors, considering its sustained growth trajectory.
See More
Market Outlook Analysis for SentinelOne and Adobe
- AI Platform Advantage: SentinelOne has built its security platform around artificial intelligence since inception, enabling local threat detection and response; despite competition, it achieved $1 billion in revenue for fiscal 2026, a 22% year-over-year increase, with a projected 20% growth for fiscal 2027.
- Financial Health: Although SentinelOne continues to report net losses, it generated $52 million in free cash flow, indicating that the company can raise funds without diluting shareholders, which is particularly significant in the current market environment.
- Adobe's Financial Performance: Adobe reported $6.4 billion in revenue for Q1 of fiscal 2026, a 12% year-over-year increase, and despite challenges from increased competition and a spike in tax expenses, its net income remains robust at $1.9 billion, reflecting solid financial fundamentals.
- Market Valuation Comparison: With a price-to-sales ratio of 5, SentinelOne is significantly cheaper than competitors like CrowdStrike and Palo Alto Networks; investors can purchase 99 shares for around $1,450, and if the stock doubles, it would still be considered a relatively inexpensive option, indicating market underestimation of its growth potential.
See More
Financial Performance Analysis of Okta and Zscaler
- Okta Revenue Growth: Okta reported a 12% year-over-year revenue increase for fiscal 2026, nearing $3 billion in subscription revenue, demonstrating resilience in the market despite facing threats from artificial intelligence.
- Zscaler Financial Performance: Zscaler's second-quarter revenue for fiscal 2026 reached $815.8 million, reflecting a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, showcasing its competitiveness in the rapidly expanding cybersecurity market.
- Changing Growth Expectations: Okta anticipates a slowdown in revenue growth to 9% for fiscal 2027, while Zscaler has revised its fiscal 2026 revenue growth forecast upward to 24%, indicating a stronger growth trajectory for Zscaler in the market.
- Investment Value Assessment: Although Okta's stock has dropped 30%, it may be undervalued, while Zscaler's stock has also declined by 20%, yet its financial metrics present a more appealing investment opportunity, particularly in AI-driven security products.
See More
Comparing Long-Term Investment Prospects of Okta and Zscaler
- Okta Financial Performance: Okta reported a 12% year-over-year revenue increase for fiscal 2026, nearing $3 billion, but its revenue growth forecast for 2027 has declined to 9%, indicating a slowdown that may affect investor confidence.
- Zscaler's Strong Growth: Zscaler reported $815.8 million in revenue for Q2 of fiscal 2026, a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, and it expects 24% revenue growth for the full year, showcasing robust market performance.
- Market Valuation Comparison: While Okta's stock has dropped 30% in the past year, it may be undervalued, whereas Zscaler's stock has also fallen over 20%, but its forward P/E ratio remains above 40, indicating market attractiveness.
- AI Impact and Competition: Okta faces growth challenges due to AI disruptions, while Zscaler is proactively collaborating with AI to launch AI-driven security products, enhancing its competitive edge, making Zscaler a more favorable long-term investment.
See More
Comparing Investment Prospects: Okta vs. Zscaler
- Okta Financial Performance: In fiscal year 2026, Okta achieved a 12% year-over-year revenue increase, reaching nearly $3 billion, yet its revenue growth forecast for 2027 has declined to 9%, indicating a slowdown that could impact its long-term investment appeal.
- Zscaler Strong Growth: Zscaler reported $815.8 million in revenue for Q2 of fiscal 2026, marking a 26% year-over-year increase, with annual recurring revenue growing 25% to $3.3 billion, and it expects 24% revenue growth for the full year, demonstrating financial health and market competitiveness.
- Market Valuation Changes: While Okta's stock has dropped 30% over the past year, its current valuation may be undervalued, whereas Zscaler's stock has also fallen over 20%, but its forward P/E ratio exceeds 40, reflecting market confidence in its future growth.
- AI Impact and Strategic Positioning: Facing growth challenges due to AI, Okta's deceleration is concerning, while Zscaler's collaboration with AI to develop security products showcases its stronger market adaptability, potentially giving it an edge in future competition.
See More
AI Disruption in Cybersecurity Sector
- Market Disruption: Anthropic's Claude Cowork has demonstrated the potential of generative AI applications to gradually displace many enterprise SaaS companies, leading analysts to reevaluate the current earnings value of these stocks and causing market turbulence.
- Cybersecurity Threat: The launch of Claude Cybersecurity, which scans codebases and suggests AI-generated fixes, poses a short-term threat to cybersecurity stocks but highlights the increasing importance of cybersecurity in the AI era, potentially prompting enterprises to increase security investments.
- Palo Alto Networks Expansion: Palo Alto Networks has enhanced its identity security services through the acquisition of CyberArk, aiming to become a one-stop solution for enterprise cybersecurity needs; despite traditional hardware business dragging overall growth, next-generation software service revenue grew by 33% year-over-year.
- ZScaler Transformation: ZScaler's launch of the AI Protect service supports secure AI usage in networks, and its shift from user-based to usage-based pricing has driven non-seat revenue growth of over 100% year-over-year, indicating strong growth potential in the cloud computing era.
See More
AI Stocks Sell-Off: Investors Eye Discounts Amid Valuation Concerns
- SentinelOne Performance: Despite a significant drop in 2022, SentinelOne reported $1 billion in revenue for fiscal 2026, marking a 22% year-over-year increase, with a projected 20% growth for fiscal 2027, indicating its ongoing growth potential in the AI sector.
- Cash Flow Position: The company generated approximately $52 million in free cash flow in fiscal 2026, ensuring it can raise funds without diluting shareholder equity, which enhances investor confidence.
- Adobe Financial Metrics: Adobe achieved $6.4 billion in revenue for Q1 fiscal 2026, a 12% increase year-over-year, and despite competitive pressures and a spike in tax expenses, net income reached $1.9 billion, showcasing its financial robustness.
- Valuation Appeal: With a P/E ratio of 15 and a forward P/E of 11, Adobe's current stock price of $246.09 presents a potential value buying opportunity for investors, considering its sustained growth trajectory.
See More
Market Outlook Analysis for SentinelOne and Adobe
- AI Platform Advantage: SentinelOne has built its security platform around artificial intelligence since inception, enabling local threat detection and response; despite competition, it achieved $1 billion in revenue for fiscal 2026, a 22% year-over-year increase, with a projected 20% growth for fiscal 2027.
- Financial Health: Although SentinelOne continues to report net losses, it generated $52 million in free cash flow, indicating that the company can raise funds without diluting shareholders, which is particularly significant in the current market environment.
- Adobe's Financial Performance: Adobe reported $6.4 billion in revenue for Q1 of fiscal 2026, a 12% year-over-year increase, and despite challenges from increased competition and a spike in tax expenses, its net income remains robust at $1.9 billion, reflecting solid financial fundamentals.
- Market Valuation Comparison: With a price-to-sales ratio of 5, SentinelOne is significantly cheaper than competitors like CrowdStrike and Palo Alto Networks; investors can purchase 99 shares for around $1,450, and if the stock doubles, it would still be considered a relatively inexpensive option, indicating market underestimation of its growth potential.
See More
