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Om Jaiswal
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CrowdStrike (CRWD – Free Report) and Zscaler (ZS – Free Report) are both at the forefront of the cybersecurity space, playing key roles in guarding organizations from extensive cyberattacks. While Palo Alto Networks focuses broadly on next-generation firewalls, cloud security and AI-driven threat detection, Zscaler is a leader in zero-trust security and specializes in secure access service edge and cloud security.
Both CRWD and ZS are riding the key industry trends, driven by the mounting incidents of credential theft, remote desktop protocol breaches and social engineering-based strikes by malicious actors. However, from an investment point of view, one stock offers a more favorable outlook than the other right now. Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which stock offers a more compelling investment case.
CrowdStrike provides its cybersecurity services mainly through its Falcon platform. CrowdStrike’s Falcon platform is renowned for being the industry’s first multi-tenant, cloud native, intelligent security solution. The Falcon platform helps secure workloads across on-premise, cloud-based and virtualized environments running on several endpoints, such as desktops, laptops, servers, virtual machines and IoT devices.
CrowdStrike’s cloud-based Falcon platform currently provides 33 cloud modules via a software-as-a-service subscription model that is categorized under three categories: Endpoint Security, Security & IT Operations and Threat Intelligence. The share of subscription-based sales to CrowdStrike’s total revenues grew from 72% in fiscal 2017 to 95% in fiscal 2026.
CrowdStrike’s Falcon Flex subscription model is becoming an important driver of its growth. Falcon Flex makes it easier for customers to access multiple modules of the Falcon platform through a single contract. This makes it easier for customers to deploy additional security products over time and expand their use of the Falcon platform, which has now become the company’s primary go-to-market model.
Annual recurring revenue (ARR) from Flex accounts crossed $1.9 billion, growing more than 99% year over year, in the first quarter of fiscal 2027, which shows strong adoption across enterprise customers. In the first quarter of fiscal 2027, CrowdStrike added more than 300 Flex customers and ended the first quarter with over 1,900 customers who have adopted Falcon Flex.
However, CrowdStrike’s recent quarterly reports have shown a deceleration in its growth rate. The company’s revenue growth, while still robust, is not as explosive as in previous years. CrowdStrike had enjoyed more than 35% year-over-year top-line growth till fiscal 2024. The growth rate decelerated to 29% in fiscal 2025 and to 22% in fiscal 2026. For fiscal 2027, CrowdStrike expects total revenues to be in the range of $5.915 billion to $5.959 billion. This indicates that the top-line growth is expected to stay around 23% to 24%, which is way lower than the explosive growth enjoyed by the company in the previous years.
Zscaler is seeing strong adoption of its Zero Trust Everywhere strategy, which is helping the company expand beyond its traditional user security offerings. The strategy combines security for users, cloud workloads and branch locations on a single platform, allowing customers to secure more parts of their IT environment through Zscaler.
The company ended the third quarter of fiscal 2026 with more than 700 Zero Trust Everywhere enterprises, up from more than 550 in the previous quarter. Management stated that customers are increasingly looking for security solutions that protect users, workloads and branches together rather than using separate products. This trend should help Zero Trust Everywhere support the rising adoption of Zscaler’s platform.
The strategy is also helping Zscaler win larger deals. During the third quarter, the company signed the largest branch deal in its history with a healthcare system that is deploying its Zero Trust Branch solution across 2,000 sites. Zscaler also won a seven-figure deal with a healthcare technology company that adopted Zero Trust Cloud, Zero Trust Branch and four data security modules. In another deal, a large automotive manufacturer expanded its use of Zero Trust Cloud to secure its multi-cloud environment.
Management believes demand for Zero Trust Everywhere will continue to increase as enterprises adopt more cloud applications, connected devices and AI technologies. Customers are no longer focused only on securing users. They are also looking to secure workloads, branches and AI environments through a unified platform.
Zscaler views this as an important competitive advantage over traditional firewall-based security vendors. As more customers adopt multiple products across the platform, Zero Trust Everywhere could help the company increase customer spending, win larger deals and support long-term growth.
The Zacks Consensus Estimate for CRWD’s fiscal 2027 and 2028 EPS is pegged at $4.93 and $6.24, respectively. The estimates for fiscal 2027 and 2028 have been revised up by 8 cents and 9 cents, respectively, over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Zscaler’s fiscal 2026 and 2027 EPS is pinned at $4.13 and $4.58, respectively. The estimates for fiscal 2026 and 2027 have been revised upward by 12 cents and 4 cents, respectively, over the past 30 days.
Image Source: Zacks Investment Research
Year to date, shares of CRWD have surged 46.1%, while ZS shares have plunged 44.5%.
Image Source: Zacks Investment Research
Currently, ZS is trading at a forward sales multiple of 5.26X, significantly lower than CRWD’s forward sales multiple of 27.08X. ZS’ reasonable valuation makes it more attractive for investors looking for value and stability.
Image Source: Zacks Investment Research
Both CrowdStrike and Zscaler are key players in the cybersecurity space, but CrowdStrike is witnessing a slowdown in its sales growth. In contrast, Zscaler shows steadier execution, where the company is witnessing strong adoption of its security products. Further, ZS’s reasonable valuation offers some downside protection as well, giving ZS a clear edge over CRWD for investors seeking exposure to cybersecurity growth at a fair price.
Currently, Zscaler carries a Zacks Rank #3 (Hold), giving the stock a clear edge compared to CrowdStrike, which has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CrowdStrike vs. Zscaler: Which Cybersecurity Stock Has an Edge? – Zacks Investment Research
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