Zscaler stock rises over 4% as strong earnings offset slower growth outlook and restructuring plans

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Zscaler surges 4.29% today on results

Highlights

Zscaler reported quarterly revenue of $898 million, up 25% year-over-year, and adjusted earnings per share of $1.19, surpassing analyst expectations.
The company projects fiscal 2027 revenue growth to slow to 17% and is cutting 3% of its global workforce, incurring up to $33 million in restructuring charges to fund investment in AI security and product expansion.
Shares of Zscaler trade in a bullish structure across all timeframes, with near-term price consolidation expected between $189.57 and $213.24, and a 61% probability of further upside.

Stronger revenue and layoffs reshape investment focus on AI security

Zscaler reported fourth quarter results that exceeded analyst expectations, with revenue rising 25% year-over-year to $898 million and adjusted earnings per share of $1.19. The company projected that fiscal 2027 revenue growth would slow to approximately 17% and announced a 3% global headcount reduction, incurring $30 million to $33 million in restructuring charges. Zscaler’s CEO described these actions as part of a strategic reallocation to fund investment in AI security, specialized sales teams, and expansion of zero trust and AI-based security products.

Anton Kharitonov, expert at Traders Union, sees Zscaler's earnings beat as overshadowed by longer-term growth concerns and a looming headcount reduction. He points out that the technical setup remains strong but warns about overbought signals and high volatility. The planned cost cuts and shift in strategy expose execution risk, particularly if AI-focused investments don't deliver as promised. The bullish sentiment shown by recent price strength could quickly reverse if macro pressures or sector weakness return. "Despite robust numbers, I think the market is underpricing the risk of disappointment should growth slow faster than expected or restructuring miss targets."

Viktoras Karapetjanc, expert at Traders Union, believes Zscaler’s strategic shift signals proactive leadership and a long-term growth mindset. He views the focus on AI-driven security and specialized sales teams as positioning the company for continued dominance. Despite near-term slowdown, the bullish structure remains intact and further growth is expected as industry demand for zero trust solutions accelerates. "In my view, Zscaler’s investments in innovation offer multiple bullish setups going forward."

Jainam Mehta, market strategist, notes the technical momentum for Zscaler remains intact above key moving averages. He sees mixed short-term signals, with bullish MACD and ADX but a potential pullback flagged by the Stochastic RSI. This divergence in momentum may offer tactical opportunities, especially if the stock consolidates between $189.57 and $213.24. "I’d watch for either a breakout above resistance to confirm trend continuation or a retreat to support as a contrarian entry."

Bullish trend persists as technical momentum contradicts short-term overextension

Zscaler is trading above its 20-day, 50-day, and 200-day moving averages, with the current price at $201.41 compared to the MA-20 at $186.97, MA-50 at $173.85, and MA-200 at $167.43. This bullish alignment persists across short-, medium-, and long-term timeframes, with a near-term support level at $200.28 and resistance at $213.24. Momentum indicators show a mixed picture: both MACD and ADX point to bullish momentum, while the RSI at 53.66 and CCI at 55.8 confirm buyers are in control though not at extremes. The Bull/Bear Power (BBP) at 11.68 highlights strong intraday buying but signals some overbought conditions. Stochastic RSI suggests a short-term downside overextension, diverging from other bullish momentum signals. Today, the stock gapped lower at the open but reversed sharply upward, closing near session highs amid high volatility.

Earlier, analysts noted that Zscaler's AI-driven security advancements and resilient technical trends supported a bullish outlook despite ongoing margin concerns. The latest earnings results and restructuring updates add a new layer to the narrative, with traders now focused on the $213.24 resistance as a key breakout level that could shift short-term momentum.

Source of Data: ZS Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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