Why Wells Fargo Thinks Zscaler (ZS) Can Push Through Recent Noise

Zscaler, Inc. (NASDAQ:ZS) is one of the cheap AI stocks to buy in 2026.

On March 3, 2026, Wells Fargo initiated coverage of Zscaler with an Overweight rating and a $200 price target. Wells Fargo analyst sees a favorable entry point after recent “noise” tied to Red Canary, while expecting Zscaler’s core business to remain stable and newer growth areas such as Zero Trust Exchange, data security, and AI to help sustain roughly 20% growth. The note also highlighted the firm’s view that Zscaler is deeply embedded in large enterprises, with meaningful penetration across the Fortune 500 and Global 2000, and argued that concerns about logo-based saturation are overstated.

The rating followed the company’s fiscal second-quarter 2026 results released on February 26, 2026, for the quarter ended January 31, 2026. Revenue increased 26% year over year to $815.8 million, while ARR rose 25% to $3.359 billion. Zscaler also reported non-GAAP EPS of $1.01 and non-GAAP operating income of $181.0 million, or a 22% margin. Management said demand remained strong across its three growth pillars, which it identified as AI Security, Zero Trust Everywhere, and Data Security, and raised full-year fiscal 2026 ARR growth guidance to 24%.

Zscaler, Inc. (NASDAQ:ZS) is an AI-powered cloud security company focused on zero-trust architecture. Its platform secures users, workloads, and devices by connecting them directly to applications and services without relying on traditional network perimeter tools.

While we acknowledge the potential of ZS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

Disclosure: None.