Zscaler vs. Cisco: Which Cybersecurity Stock Is the Better Buy?
- CSCO
- ZS
Zscaler, Inc. ZS and Cisco Systems, Inc. CSCO are well-known companies in the fast-growing enterprise cybersecurity market, but their business models are very different. Zscaler is a cloud-native security specialist built around zero-trust access, SASE and AI security, while Cisco combines cybersecurity with networking, observability and infrastructure.
Both companies are seeing stronger demand as enterprises secure cloud workloads and AI systems. However, investors must be wondering which stock offers the better combination of growth, financial strength, valuation and risk.
Let’s delve deeper to determine which stock offers a better investment option right now.
Zscaler: Strong Business, But Growth Is Losing Momentum
Zscaler continues to post solid financial results. In the fourth quarter of fiscal 2026, revenues increased 24.9% year over year to $898.2 million, while non-GAAP earnings per share (EPS) jumped 33.7% to $1.19. Annual recurring revenue (ARR) also rose 25% to $3.77 billion, and RPO increased roughly 27% to $7.4 billion. Net new ARR growth (excluding contribution from the Red Canary acquisition) accelerated to 17% in the fourth quarter compared with 7% in fiscal 2025. This suggests customers are not simply renewing existing subscriptions but are expanding their use of Zscaler’s platform.
The company’s Zero Trust platform remains its biggest strength. More than 950 enterprises had adopted its Zero Trust Everywhere offering by the end of the fourth quarter, up from more than 700 in the previous quarter and 350 in the year-ago quarter. With about 11,000 enterprise customers globally, Zscaler still has plenty of room to expand.
The company is also widening its opportunity beyond traditional user-based security. In the fourth quarter, Zscaler’s non-seat-based offerings generated about 30% of new and upsell annual contract value, with ARR tied to these offerings growing more than 100%. Its Z-Flex program also produced more than $770 million of fourth-quarter contract value, while larger customers continued expanding their deployments.
AI is another important opportunity. Zscaler is extending its Zero Trust technology to protect AI applications and agents, while the Symmetry Systems acquisition could improve visibility into identity and access across AI environments. The company’s Security for AI bookings rose more than 50% sequentially in the fourth quarter, and its Zero Trust Exchange is being positioned to secure users, workloads, branches, AI applications and agents. It is processing more than 750 billion transactions per day through its security cloud, which supports its ability to collect security telemetry at scale.
