Zscaler rises 2.6% after Investor Day and IBM, Red Hat collaboration news

What happened

Zscaler (ZS) rose 2.6% to $201.80 on October 5, 2026, after Investor Day updates and an announced collaboration with IBM and Red Hat aimed at protecting private applications from Frontier AI–powered threats. At Investor Day the company reiterated its first-quarter and full fiscal 2027 guidance and positioned itself as a cybersecurity platform for the AI era. GlobeNewsWire reported that IBM and Red Hat will integrate Zscaler’s Autonomous Application Shield with Lightwell to provide inline protection and validated remediation. Ahead of Investor Day, CEO and founder Jay Chaudhry told Yahoo Finance that AI agents represent a major new security risk and outlined how zero trust principles apply to agentic stacks.

How big was the move

The change was an ordinary session for this stock. The stock rose 2.6% on the day, a move equal to 0.7 times a typical daily move for this stock, and it outperformed the Technology sector median by 2.5 percentage points. Trading volume was 0.7 times its 20-day average while the S&P 500 rose 0.7% on the same day. Over the last five sessions the stock rose 1.2%, matching the S&P 500’s five-session gain of 1.2%.

The technical picture

The stock closed 4.5% above its 20-day moving average and 11.9% above its 50-day moving average, while it was 21.4% above its 200-day moving average. The 50-day average is above the 200-day average, a sign of an established uptrend, and the stock had traded above the 200-day average for 16 consecutive trading days. The Relative Strength Index (14 days) stood at 58, in a neutral range between 30 and 70. Over one month the stock rose 13.5% and over three months it rose 35.0%.

Technically, the one-year performance remained a weakness: the stock fell 34.4% over that period and was 40.1% below its 52-week high. That left Zscaler 50.2 percentage points behind the S&P 500 for the year. Volatility was elevated over the medium term, at 62% annualized over 60 days, a reading higher than 69% of its own five-year history. The stock’s beta of 1.11 indicates it tends to move more than the market.

Fundamentals and valuation

For the four quarters through July 31, 2026, Zscaler reported revenue of $3.35 billion, which grew 25.4% from a year earlier and compared with revenue growth of 24.6% one quarter earlier. Diluted earnings per share for that period were $-0.39. Gross margin was 76.8%, down slightly from 76.9% a year earlier, while operating margin was 4.0%, versus 4.6% a year earlier.

Free-cash-flow margin was 25.4%, a key measure of cash conversion, while return on invested capital was 2.7%. The balance sheet showed net debt of 5.0 times EBITDA and share count over one year increased by 2.4%. These figures point to strong top-line growth and cash generation but a levered balance sheet and modest profitability on an accounting basis.

Valuation measures reflect growth expectations priced into the stock: price to forward earnings was 41.4 times expected earnings and free-cash-flow yield was 2.7%. PromtFinance scores ranked Growth at 81 (Strong) and Revisions at 73 (Positive), while Value was 34 (Weak), Quality 32 (Weak) and Stability 38 (Weak).

Earnings and analyst expectations

Zscaler last reported on September 3, 2026, with earnings per share of $1.19 against $1.09 expected, 9.2% above estimates. That was the 14th consecutive quarter beating estimates and the average surprise over the last four reports was 10.3% above estimates. The company’s typical two-day reaction after recent reports was to rise 1.9%. The next report was scheduled for November 24, 2026.

Analysts numbering 53 carried a consensus rating of Buy, with 79% assigning a Buy or higher rating. The consensus price target was $201.25, 0.3% below the closing price. Together, the analyst consensus and recent surprise history suggest expectations are elevated and already reflected in the share price.

What to watch

• November 24, 2026: next quarterly report date
• Consensus price target $201.25, 0.3% below the closing price
• Four quarters through July 31, 2026: revenue $3.35 billion, grew 25.4%
• Balance sheet: net debt of 5.0 times EBITDA
• PromtFinance Growth score 81 (Strong)