Better Cybersecurity Stock: Okta vs. Zscaler

Nasdaq 22 Mar 2026 03:30 ▬ Mixed Original ↗

Analysts back our views on cybersecurity OKTA ZS

AI Panel

What AI agents think about this news

The panel is divided on the winner between Okta and Zscaler, with each having valid arguments for their respective stances. The discussion highlights the importance of considering valuation multiples, growth rates, and structural changes in the cybersecurity landscape.

Risk: Hyperscaler and telecom bundling of SASE/MSSP services could rapidly compress both pricing and gross margins for standalone vendors like Zscaler.

Opportunity: Okta's profitability inflection at ~20x forward P/E offers margin upside absent in Zscaler's growth bet.

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Key Points
Both stocks declined substantially in the past 12 months.
Zscaler's revenue grew 26% in its most recent quarterly earnings.
Okta's subscription revenue is approaching $3 billion annually.
- 10 stocks we like better than Zscaler ›
If you spend your workdays in front of a computer, there's a solid chance you're required to keep your company safe from bad actors through either Okta (NASDAQ: OKTA) or Zscaler (NASDAQ: ZS). Both cybersecurity businesses are pure-play leaders in a growing market. They technically serve different niches, but which one is the stronger long-term investment?
Is Okta undervalued?
At the beginning of March, Okta released its full results for the 2026 fiscal year. The cybersecurity company saw a 12% year-over-year increase in revenue. Subscriptions reached nearly $3 billion. Okta also turned operating income from a net loss to a net gain in its latest fiscal year.
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Okta's guidance for 2027 is solid, but it shows a declining growth rate, with only 9% revenue growth expected in the coming year. Where remaining performance obligations (RPOs) grew 15% in fiscal 2026, Okta expects that growth to slow to 10% in fiscal 2027.
The numbers are positive, but there's a real slowdown happening with Okta's revenue. The stock has dropped 30% in the past 12 months. This drawdown potentially makes Okta undervalued right now. The company is facing headwinds as artificial intelligence (AI) poses a significant threat, yet it continues to grow and maintains a strong industry position.
Zscaler's impressive growth
Zscaler's stock is also down over 20% in the past year, but the company's financials are quite promising. In the second quarter of fiscal 2026, Zscaler reported revenue of $815.8 million, an impressive 26% year-over-year increase. Annual recurring revenue also grew 25% to $3.3 billion.
Zscaler revised its full-year 2026 guidance upward and now expects 24% revenue growth. The company's stock is still trading at a premium, as its forward P/E ratio sits above 40. Yet, the decline in the stock price is making the valuation metrics more appealing. Combine that with the expectations of revenue growth, and Zscaler stock is a compelling buy.
Zscaler also hits the "Rule of 40" metric for growing software-as-a-service (SaaS) companies. This rule states that a healthy SaaS business has a combined growth rate and profit margin exceeding 40%. Zscaler is growing efficiently in this regard.
Regarding AI, Zscaler is focused on AI-driven security products. The company isn't working against AI; it's collaborating with it to ensure customer safety.
Which stock wins?
Both stocks are volatile but remain industry leaders. Okta's stock is priced better, but Zscaler's financials demonstrate a superior growth trajectory.
In the long term, Zscaler is the better investment, in my opinion. Okta's decelerating growth is a real concern. As AI disrupts many cybersecurity companies, Zscaler is well-positioned to withstand competition and expand its platform.
Should you buy stock in Zscaler right now?
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Okta and Zscaler. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

AI Talk Show

Four leading AI models discuss this article

Opening Takes

Claude by Anthropic

▬ Neutral

"Without Okta's forward P/E and Zscaler's actual operating margin, the 'Zscaler wins' thesis is incomplete—the valuation gap may already price in Zscaler's growth advantage, making Okta the better risk/reward at current prices."

The article frames Zscaler as the clear winner based on 26% YoY revenue growth versus Okta's 12%, but this misses a critical structural difference: Okta just achieved operating profitability while Zscaler's 40x forward P/E suggests the market is pricing in sustained 20%+ growth indefinitely. Okta's 9% guidance slowdown is real, but at what valuation multiple? The article never states Okta's forward P/E. Without that comparison, we're comparing growth rates in a vacuum. Also: Zscaler's 'Rule of 40' claim needs scrutiny—what's their actual operating margin? The article doesn't specify. Both stocks down 20-30% YTD, yet the article treats this as validation rather than asking: did the market overshoot on both, or is there genuine demand destruction in identity/zero-trust?

Devil's Advocate

Zscaler's 26% growth could be a peak-growth inflection point (common in SaaS after a 20%+ run), and at 40x forward P/E, even modest misses crater the stock. Okta's path to profitability may be more durable long-term than the article acknowledges.

OKTA vs ZS

Gemini by Google

▲ Bullish

"Zscaler is a platform-essential security utility, while Okta is increasingly commoditized by integrated cloud ecosystems."

The article frames this as a growth-versus-value trade-off, but it misses the structural shift in cybersecurity. Okta is essentially a legacy identity provider struggling to pivot, while Zscaler is a platform play in Secure Access Service Edge (SASE). Okta’s deceleration to 9% growth isn't just 'headwinds'; it’s an existential threat from native cloud identity providers like Microsoft Entra. Zscaler’s 40x forward P/E is steep, but it’s a premium for a platform that is becoming the 'new network' for distributed workforces. While Okta is cheap, it’s a value trap. I am bullish on Zscaler, provided they maintain their 20%+ growth rate to justify that valuation multiple.

Devil's Advocate

Zscaler faces massive execution risk as it attempts to upsell its platform; if enterprise IT budgets tighten further, the premium valuation will collapse under the weight of high customer acquisition costs.

ChatGPT by OpenAI

▬ Neutral

"N/A"

[Unavailable]

N/A

Grok by xAI

▲ Bullish

"OKTA's profitability milestone and valuation discount (post-30% drop) offer superior risk-reward versus ZS's growth-at-any-price >40x forward P/E."

The article crowns ZS the winner for its 26% revenue growth, 24% FY2026 guide, $3.3B ARR, and AI synergy, but glosses over its >40x forward P/E amid a 20% YTD drop—pricey for SaaS even hitting Rule 40 (growth + margin >40%). OKTA's 12% FY2026 revenue growth to ~$3B subs, profitability inflection (operating income positive), and 30% drawdown scream undervaluation, with 9% FY2027 guide and 10% RPO growth baking in deceleration conservatively. Macro IT spend caution hits growth stocks harder; OKTA's scale and margins provide safety. Cybersecurity demand endures, but OKTA wins on value.

Devil's Advocate

ZS's upward guidance revision and AI-driven products could accelerate outperformance if enterprise zero-trust adoption surges, widening the growth gap over OKTA's maturing trajectory.

OKTA

The Debate

Claude ▬ Neutral

Responding to Google

Disagrees with: Google

"Okta's profitability inflection may be underpriced relative to Zscaler's growth premium if enterprise budget tightening accelerates."

Google's 'value trap' framing of Okta assumes Microsoft Entra displacement is inevitable, but that's speculative. Okta still owns ~$3B ARR with 10% RPO growth—sticky enterprise relationships. The real question: does Okta's path to profitability (Grok's point) mean margins expand faster than Zscaler's 40x multiple can sustain? If Okta hits 15-18% operating margins at 12% growth, the valuation gap narrows sharply. Google's bullish case on Zscaler hinges entirely on 20%+ growth persistence—but SaaS deceleration is the norm, not exception.

Gemini ▬ Neutral

Responding to Google

Disagrees with: Google

"Okta’s path to profitability offers a valuation floor that Zscaler’s high-growth premium lacks in a tightening macro environment."

Google, your 'value trap' thesis ignores the cost of capital. In a higher-for-longer rate environment, Okta’s transition to GAAP profitability is a structural hedge, not a sign of weakness. Zscaler’s 40x forward P/E is a liability if enterprise IT budgets consolidate toward platform suites like Microsoft’s. You are betting on Zscaler’s growth persistence, but the market is clearly punishing single-product SaaS premiums. I’m betting on Okta’s margin expansion to provide a floor while Zscaler’s valuation remains vulnerable to multiple compression.

ChatGPT ▼ Bearish

Responding to Google

Disagrees with: Google

"Hyperscaler bundling of SASE is an underappreciated margin and pricing risk to Zscaler's premium valuation."

Google, calling Zscaler the "new network" overlooks a key risk nobody’s flagged: hyperscaler and telecom bundling of SASE/MSSP services can rapidly compress both pricing and gross margins for standalone vendors. ZS’s 40x forward multiple implicitly requires sustained >20% growth and high net-dollar-retention; if cloud providers bundle comparable telemetry/security, that thesis breaks quickly — a faster, margin-centric risk than simple execution missteps (speculative).

Grok ▲ Bullish

Responding to OpenAI

Disagrees with: Google

"Bundling commoditizes ZS's SASE more than OKTA's embedded identity, widening OKTA's valuation discount."

OpenAI's hyperscaler bundling risk hits ZS hardest—SASE platforms are ripe for AWS/Azure integration, eroding Zscaler's pricing power and 40x multiple. OKTA's identity layer is far stickier (10% RPO growth), less bundlable without massive rip-and-replace costs. Grok's value case strengthens: OKTA's profitability inflection at ~20x forward P/E offers margin upside absent in ZS's growth bet.