KeyBanc cut Zscaler's target to $176 after its CIO survey showed the budget gap widening. Guggenheim sees a buying opportunity at $214. The Zenith product update is the next catalyst.
KeyBanc lowered its price target on Zscaler (ZS) to $176 from $190 on Wednesday, holding an Overweight rating. The cut followed the bank's CIO survey for the first half of 2026, which showed the gulf between IT budget winners and losers “just got wider,” KeyBanc said. Spending on AI and AI-readiness rose sharply in priority, while room for everything else shrank. Security, data, infrastructure, and monitoring names remain top picks, according to the firm.
The tension is plain. Zscaler sells cloud security based on a Zero Trust architecture. The CIO survey suggests the biggest buyers are pouring capital into AI infrastructure, not necessarily into security tools that still need to prove incremental return. KeyBanc's target still implies roughly 10% upside from Wednesday's close – the Overweight rating is intact – but the survey frames a market where budget visibility is narrowing.
Guggenheim upgraded Zscaler to Buy from Neutral earlier this month with a $214 target. The firm called it a “trust me story,” but said the valuation creates an entry point for a category leader in an early-stage hyper-growth market. Guggenheim argued Zscaler's relevance will grow in the AI era, especially among C-level executives who have embraced Zero Trust. The $214 target is roughly 30% above KeyBanc's.
Wells Fargo struck a middle position last month, trimming its target to $180 from $210 while keeping an Overweight. The bank said resetting next year's top-line numbers is necessary, and flagged free cash flow headwinds that would keep many investors on the sidelines. Wells Fargo pointed to Zscaler's upcoming Zenith product update as the next chance for clarity.
AlphaScala's internal model rates ZS at 19 out of 100 – a Weak score. The rating reflects the gap between the long-term bull case for Zero Trust as an AI-era security standard and the near-term pressure from slowing growth, noisy cash flow, and a budget environment that favors established platforms. The CIO survey reinforces that dynamic: incumbents with proven ROI are pulling ahead, while stories built on future adoption need delivery.
The next visible catalyst is the Zenith event. Zscaler's management will need to show that its platform keeps pace with how AI workloads are reshaping network traffic patterns. Until then, the analyst range – $176 to $214 – captures the split between patience and impatience.
For more context on Zscaler, see the ZS stock page.
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