Zscaler (ZS): 5% Undervalued Amid AI Security Boom

Zscaler could be 5% undervalued due to increased spending on AI-focused cybersecurity. The company is back in the spotlight after management outlined higher capital spending plans tied to AI demand. This comes with fresh Gartner recognition and positive commentary from resellers and analysts. What's interesting is Zscaler's share price has been volatile. It saw a 1-month return of almost 24% and a 7-day gain of nearly 9%. However, it's still down over 16% year-to-date. Recent AI announcements and Gartner recognition appear to be fueling a rebound. The most popular narrative suggests Zscaler's fair value is $192.58, compared to a recent close of $183.60. This frames today's rebound as only a partial catch-up to that estimate. The company is addressing new security challenges from AI/ML traffic with differentiated AI security products. This positions Zscaler to capture a rising share of cyber budgets and expand recurring revenue. The bottom line is Zscaler's potential undervaluation highlights the growing impact of AI on the cybersecurity market.