Zscaler, Inc. (NASDAQ:ZS) stock is trading higher by almost 7% on Wednesday after DA Davidson initiated coverage with a Neutral rating and announced a price target of $215.
The stock also benefited from a broader technology rally. The Nasdaq is up 0.93% while the S&P 500 has gained 0.31%, and Technology is leading sectors with a 1.33% gain.
Separately on Wednesday, the company announced support for NVIDIA Corp.'s (NASDAQ:NVDA) OpenShell Reference Architecture, strengthening security and governance for autonomous AI agents across enterprise environments.
Strengthening AI Agent Security
The Nvidia OpenShell Reference Architecture, announced during its GTC Berlin event, provides an infrastructure framework for building, monitoring, isolating and governing autonomous AI agents across enterprise systems and edge environments.
The collaboration combines Nvidia's AI agent infrastructure with Zscaler's Zero Trust Exchange platform.
The integration is designed to help organizations prevent unauthorized access, protect sensitive data and limit potential damage from compromised or unintended AI agent behavior.
"AI capability and safety must advance together. As enterprises prepare to deploy billions of AI agents, safety and control must be built into the computing architecture," Nvidia CEO Jensen Huang said in a statement.
In early October, Zscaler announced a security collaboration with IBM (NYSE:IBM) and Red Hat.
CEO Jay Chaudhry said the rise of agentic AI creates a tailwind for Zscaler's Platform and will drive it towards its $10 billion ARR target.
Zscaler Reaffirms Fiscal 2027 Outlook
Recently, on Oct. 6, Zscaler reaffirmed its first-quarter and fiscal 2027 outlook at its Investor Day.
For the first quarter, Zscaler expects revenue of $935 million to $939 million, representing a year-over-year growth of 19% and above the $927.024 million estimate.
The company expects non-GAAP earnings of $1.15 to $1.16 per share, above the $1.08 estimate.
For fiscal 2027, the company reaffirmed revenue guidance of $3.908 billion to $3.938 billion, compared to the $3.899 billion estimate.
It expects annual recurring revenue, or ARR, of $4.396 billion to $4.426 billion.
Non-GAAP earnings are forecasted to reach $4.86 to $4.90 per share, above the $4.60 estimate.
Technical Analysis: Zscaler Stock Holds Above Key Moving Averages
Zscaler is extended above its key moving averages, trading 7.3% above the 20-day SMA ($211.77), 16.8% above the 50-day SMA ($194.58), and 37.1% above the 200-day SMA ($165.76).
That upward trend is reinforced by the Golden Cross that occurred in September (50-day SMA above the 200-day SMA).
MACD is below its signal line and the histogram is negative, which points to cooling upside pressure versus the prior upswing.
- Key Resistance: $237 — Nearby pivot/round-number area where rebounds can stall.
- Key Support: $187.50 — Prior demand zone that sits closer to the stock's recent consolidation area.
Analyst Outlook
The stock carries a Buy rating with an average price target of $242.60. Recent analyst moves include:
- DA Davidson: Initiated with Neutral (Target $215 on Oct. 21)
- Citigroup: Buy (Raises target to $260 on Oct. 15)
- Citizens: Market Outperform (Raises target to $265 on Oct. 9)
MarketDash Edge Rankings
Zscaler has a Momentum score of 89.61 on the MarketDash Edge scorecard.
The reading implies that the stock is showing strong relative strength versus the broader market.
Top ETF Exposure
Zscaler has a 3.48% weighting in the First Trust NASDAQ Cybersecurity ETF (NASDAQ:CIBR). It also accounts for 5.19% of the Global X Cybersecurity ETF (NASDAQ:BUG) and 5.66% of the iShares Cybersecurity and Tech ETF (NYSE:IHAK).
Because Zscaler has sizable weightings in these funds, ETF inflows and outflows can contribute to buying or selling pressure.
ZS Price Action: Zscaler shares were up 7.40% at $230.38 at the time of publication on Wednesday, according to market data.
