NEW YORK, July 4, 2026 — Zscaler Inc. (NASDAQ: ZS) posted a robust 11.4% gain across four active U.S. trading sessions through July 2, significantly outperforming the Invesco QQQ Trust (NASDAQ: QQQ), which rose just 0.9% over the same period. The rally comes as U.S. equity markets enter a holiday-shortened week, with Nasdaq closed on Friday, July 3, in observance of Independence Day. Trading will resume on Monday, July 7.
The cybersecurity firm’s market capitalization now stands at approximately $23.68 billion, drawing attention to its valuation multiples relative to forward guidance. Based on the midpoint of Zscaler’s fiscal 2026 annual recurring revenue (ARR) target of $3.7445 billion, the stock trades at roughly 6.3 times that figure. On a revenue basis, using the midpoint of fiscal 2026 revenue guidance of $3.331 billion, the multiple expands to 7.1 times. Enterprise value-based multiples are slightly lower, at 5.8 times ARR and 6.6 times revenue, reflecting net debt adjustments.
Zscaler’s shares closed at $147.33 on Thursday, up 0.6% for the session, with volume of 2.56 million shares — below recent averages of 3.69 million on July 1 and 3.26 million on June 29. The stock’s four-day advance of 11.4% from $132.26 on June 26 outpaced the Nasdaq-100 by more than 10 percentage points. However, it trailed Palo Alto Networks (NASDAQ: PANW), which surged 14.4% over the same stretch to $348.06. Other cloud-security peers also saw gains: CrowdStrike Holdings (NASDAQ: CRWD) rose 10.7% to $193.98, while Fortinet (NASDAQ: FTNT) added 3.2% to $156.25.
Valuation Metrics Under Scrutiny
The rally has reignited discussions about Zscaler’s revenue multiple, particularly as the company trades on forward ARR rather than past quarterly results. Zscaler’s fiscal 2026 ARR guidance ranges from $3.740 billion to $3.749 billion, with revenue expected between $3.3295 billion and $3.3325 billion. The current market cap of $23.68 billion implies a 6.3x multiple on the ARR midpoint, while enterprise value of $21.84 billion yields a 5.8x multiple.
Despite the strong price action, some analysts remain cautious. In its fiscal third quarter, Zscaler reported revenue of $850.5 million, up 25% year-over-year, and ARR of $3.525 billion, also up 25%. Excluding contributions from its Red Canary acquisition, organic ARR growth was 21%, with net new ARR up 14%. The company ended the quarter with 748 customers contributing over $1 million in ARR, 4,003 customers above $100,000, and approximately $6.5 billion in remaining performance obligations.
CEO Jay Chaudhry highlighted the company’s ability to “hide applications from attackers,” linking its zero-trust platform to emerging risks from AI agents and new threat models. CFO Kevin Rubin emphasized “record profitability,” noting that non-GAAP operating margin reached a new peak of 23%.
Analyst Pushback Persists
Not all market participants are convinced. Following Zscaler’s May earnings report, Evercore ISI downgraded the stock to In Line from Outperform and slashed its price target to $155 from $225. The firm cited changes in sales leadership and a softer fiscal 2027 outlook, with management guiding for ARR and revenue growth of 16%-17%, below consensus estimates of 18.6% and 19.5%.
Wedbush analyst Dan Ives noted that Zscaler needs to “show better execution” to escape what he termed the “investor penalty box.” Andrew DeGasperi of BNP Paribas described the guidance as “clearly designed to reset expectations,” according to MarketWatch.
Broader markets were mixed ahead of the holiday. Reuters reported that the Dow Jones Industrial Average closed at a record high, up 1.1%, while the S&P 500 ended flat and the Nasdaq Composite fell 0.8%, weighed down by weakness in semiconductor stocks. Nonetheless, the Nasdaq posted a weekly gain of 2.1%, far behind Zscaler’s 11.4% four-day advance.
Zscaler’s shares traded in a narrow range after the holiday, hitting a high of $149.58 on July 1 and a low of $145.00 on Thursday. The stock’s ability to sustain its rally will likely depend on execution against its fiscal 2027 targets and continued momentum in the cloud-security sector.
