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Why Zscaler (ZS) Is Up 9.6% After Deepening Its European Sovereign Cloud And AI Security Push

Simply Wall St · 2d ago
  • In late July and early August 2026, Schwarz Digits announced a partnership with Zscaler to deliver a sovereign Zero Trust SASE cloud service on STACKIT for critical European sectors, while the Cloud Security Alliance reported that Zscaler joined the CSAI Foundation as a Vanguard member to help shape secure, resilient AI governance frameworks.
  • Together, these moves highlight Zscaler’s push into European sovereign cloud security and its growing role in setting practical guardrails for AI-driven cybersecurity.
  • Next, we’ll examine how Zscaler’s new sovereign Zero Trust SASE offering with Schwarz Digits may influence the company’s investment narrative.

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Zscaler Investment Narrative Recap

To own Zscaler, you need to believe its cloud native Zero Trust platform can keep winning large enterprises as they consolidate security tools and confront AI driven threats. The new Schwarz Digits sovereign SASE service and Zscaler’s CSAI role both align with that thesis, but they do not fundamentally change the near term catalyst around Zero Trust and data security upsell, or the key risk that larger cloud and security vendors keep tightening their own integrated platforms.

The Schwarz Digits partnership stands out because it puts Zscaler’s Zero Trust Exchange inside STACKIT’s European sovereign cloud, directly addressing data residency and regulatory demands in critical sectors. For investors focused on catalysts, this offering connects the Zero Trust Everywhere story to highly regulated European workloads, where replacement of legacy firewalls and VPNs is often tied to strict sovereignty and resilience requirements.

Yet behind that opportunity sits a risk investors should be aware of if larger vendors accelerate their own bundled, compliance ready security suites and...

Read the full narrative on Zscaler (it's free!)

Zscaler's narrative projects $5.1 billion revenue and $131.1 million earnings by 2029. This requires 17.1% yearly revenue growth and a $208.5 million earnings increase from -$77.4 million today.

Uncover how Zscaler's forecasts yield a $192.58 fair value, a 18% upside to its current price.

Exploring Other Perspectives

ZS 1-Year Stock Price Chart
ZS 1-Year Stock Price Chart

Some of the lowest analysts were already cautious, assuming revenue of about US$5.0 billion and earnings near US$611 million by 2029, and viewing heavy AI and acquisition investment as a margin risk, so this new sovereign cloud and AI governance push could either soften or reinforce that more pessimistic view depending on how it ultimately affects costs and customer uptake.

Explore 4 other fair value estimates on Zscaler - why the stock might be worth just $192.55!

The Verdict Is Yours

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.