June 22 Nasdaq-100 rebalance will remove Zscaler, replaced by five AI and space stocks including Rocket Lab (6.54% premarket jump), Nebius (4.44%), CoreWeave (3.30%) and Astera Labs (3.14%). Zscaler has plunged nearly 60% YTD due to SaaS multiple compression and weak May earnings reaction, raising long-term opportunity questions.
On June 22, five AI and space names—Rocket Lab, Nebius, CoreWeave, Astera Labs and Teradyne—will join the Nasdaq-100 and push Zscaler out of the index. This removal could reduce passive inflows and pressure the stock as funds tracking the benchmark adjust their holdings.
Zscaler’s shares have declined nearly 60% year-to-date, driven by SaaS multiple compression and a muted reaction to May earnings. The sharp pullback has left valuation metrics under scrutiny as the company seeks to justify its premium growth narrative.
Investors are looking for concrete proof that Zscaler can turn AI interest into revenue, stabilize retention rates and accelerate net new ARR growth. Success in these areas will be critical to reversing the current downtrend and validating future guidance.
Removal from a major tech index and ongoing volatility could prompt further outflows and heightened trading swings. Until Zscaler demonstrates sustained execution on its AI-driven strategy, shares may remain vulnerable to shifts in sentiment.
Fool
