Zscaler plunges 10.7% to $142.35 on 15% tariff shock and AI sell-off
Zscaler shares plunged 10.7% to $142.35 after the White House raised global tariffs to 15% and AI sector fears triggered a sell-off. On February 17, Mizuho cut its price target to $265 from $310, and Zscaler forecast Q2 revenue of $797–799 million with EPS of $0.89–0.90.
1. Stock Plunge on Tariff and AI Fears
Shares of Zscaler fell 10.7% to $142.35 on February 23 after the White House raised global tariffs to 15% and AI-driven cybersecurity sell-off intensified. The stock has declined 35.5% year-to-date and stands 57.7% below its November 2025 52-week high of $336.27.
2. Analyst Price Target Cuts
On February 17, Mizuho lowered its price target for Zscaler to $265 from $310, and on February 13, Bernstein cut its target to $228 from $264. Both firms cited multiple compressions in the software sector and concerns over sustaining 20% growth amid heightened AI competition.
3. Q2 Fiscal 2026 Guidance
Zscaler projects second-quarter fiscal 2026 revenue between $797 million and $799 million, implying 23.2% year-over-year growth, and non-GAAP EPS of $0.89 to $0.90. Management expects momentum in its Zero Trust Everywhere platform and rising demand for AI security to drive larger enterprise deals.
4. AI-Driven Sector Headwinds
Investor worries about AI advancements, including Anthropic’s Claude Code Security tool, have prompted a sector-wide sell-off in cybersecurity stocks. Concerns center on potential AI substitution reducing the long-term pricing power of legacy security software models.