Zscaler Surpasses $3B ARR Milestone with 21% Revenue Growth

Zscaler (NASDAQ: ZS) has demonstrated strong financial performance and favorable analyst sentiment in 2025, highlighted by a robust 21% year-over-year revenue increase to $719 million in Q4 and a new operating margin record exceeding 22%. The company's annual recurring revenue (ARR) surpassed $3 billion, with projections to reach approximately $3.7 billion by fiscal 2026. Morgan Stanley upgraded Zscaler's rating to overweight and raised its price target to $320, reflecting growing confidence alongside other firms like Cantor Fitzgerald and Bank of America, which maintain overweight or buy ratings with price targets generally above $300. Analysts collectively assign Zscaler an "Outperform" consensus rating, with an average price target around $317, indicating a potential upside of about 14-16% from current trading levels near $275. Zscaler's focus on cloud-native cybersecurity solutions, including secure access to internal and external applications, underpins its market position and growth potential amid rising demand for cloud security and AI-enhanced analytics. While Zscaler is highly regarded in the software and cybersecurity sector, some investors are advised to consider alternative AI stocks with potentially greater upside and lower risk profiles.