Zscaler vs. Okta: Which Cybersecurity Stock Is the Better Buy?

For investors, however, the question is not simply which company has the stronger technology. It is which stock offers the better combination of growth, financial strength, valuation and risk. On that front, Okta looks more attractive right now.

Zscaler: Strong Business, But Growth Is Losing Momentum

Zscaler continues to post solid financial results. In the third quarter of fiscal 2026, revenues increased 25% year over year to $850.5 million, while non-GAAP earnings per share (EPS) jumped to $1.08. Annual recurring revenues (ARR) also rose 25% to $3.53 billion, and RPO increased roughly 30% to $6.5 billion.

The company’s Zero Trust platform remains its biggest strength. More than 700 enterprises had adopted its Zero Trust Everywhere offering by the end of the third quarter, up from more than 550 in the previous quarter. With about 4,500 enterprise customers compared with a potential market of roughly 20,000 enterprises, Zscaler still has plenty of room to expand.

AI is another important opportunity. Zscaler is extending its Zero Trust technology to protect AI applications and agents, while the Symmetry Systems acquisition could improve visibility into identity and access across AI environments.

The problem with Zscaler is its slowing growth. The company once routinely delivered revenue growth above 40%. This has now fallen to the mid-20% range, and management expects fiscal 2027 revenue growth of only about 16%, with ARR growth of roughly 17%.

At the same time, Zscaler is preparing for higher infrastructure spending. AI workloads require more computing, storage, networking and memory capacity, pushing capital expenditures higher. Management expects fiscal 2026 capital expenditures to reach the high-single-digit percentage of revenues compared with its earlier mid-single-digit expectation. Spending could increase by another 200 basis points in fiscal 2027.

Higher investment can be justified when growth is accelerating. However, when revenue growth is expected to slow, rising costs become a bigger concern.

Okta: Slower but Steady Growth

Okta's growth rate is lower than Zscaler's, but its financial performance remains healthy, and its outlook appears more stable. In the first quarter of fiscal 2027, revenues increased 11% to $765 million, while non-GAAP EPS rose 6% to 91 cents. RPO grew 16% to $4.72 billion, and current RPO increased 12% to $2.50 billion. Its dollar-based net retention rate also improved to 107% from 106% a year earlier.

Okta is building a potentially valuable position in the emerging AI-agent market. The company views AI agents as new digital identities that need authentication, governance and access controls. In this direction, the company has launched multiple products, including Okta for AI Agents and Auth0 for AI Agents. Okta for AI Agents became generally available in the first quarter, while Auth0 for AI Agents is aimed at developers building identity controls into agent-based applications.

These products are still early and are not yet driving material revenues. However, they give Okta another way to expand its platform as enterprises deploy more AI agents. There are already encouraging signs. New products accounted for about 25% of first-quarter bookings, while deals involving new products generated roughly a 40% annual contract value uplift. This suggests Okta has meaningful cross-selling potential within its large customer base.

Okta’s more than 20,000 customers and estimated $80 billion market opportunity also provide a strong foundation for future expansion. Its neutral position across major cloud and AI platforms could be particularly valuable as businesses use several AI technologies rather than relying on a single provider.

ZS vs. OKTA: What Does the Growth Outlook Suggest?

The Zacks Consensus Estimate for ZS’ fiscal 2026 and 2027 revenues indicates year-over-year growth of 23% and 19.2%, respectively. The consensus mark for earnings calls for increases of 15.6% and 8.2%, respectively.

Zscaler Sales and EPS Growth Rates (Y/Y %)

Image Source: Zacks Investment Research

OKTA's projected growth is more modest, with revenues expected to increase 9.5% in fiscal 2027 as well as in fiscal 2028. The Zacks Consensus Estimate for earnings depicts a rise of 9.4% for fiscal 2027 and 12% for fiscal 2028.

Okta Sales and EPS Growth Rates (Y/Y %)

Image Source: Zacks Investment Research

At first glance, analysts’ projections suggest Zscaler has a stronger growth profile. Investors should look beyond the growth rates. Zscaler is facing a much sharper deceleration, while Okta is showing greater stability. In other words, ZS offers more growth today, but OKTA offers a more predictable growth trajectory.

Valuation Gives Okta Another Advantage

Valuation further strengthens the case for Okta. The company currently trades at a forward 12-month price-to-earnings multiple of about 35.09 compared with roughly 39.94 for Zscaler.

The premium is harder to justify for Zscaler when its growth is slowing, and capital requirements are rising. Okta, meanwhile, trades at a lower multiple despite having a relatively stable business, a large installed customer base and new opportunities in AI-agent security.

Stock performance also shows a major difference in investor sentiment. Okta shares have surged about 65.6% year to date, while Zscaler has fallen 18.1%.

Zscaler's sharp decline could certainly attract contrarian investors. However, a falling stock is not automatically a bargain. Investors still need to consider whether the company's future growth can justify its valuation and rising investment needs.

Final Verdict: Okta Is the Better Bet Right Now

The investment case is more compelling for Okta. Its growth may be slower, but the company offers a better balance of financial stability, valuation, cross-selling potential and AI upside. Its expanding AI-agent strategy could also create a new growth engine without requiring the same level of infrastructure spending that Zscaler is facing.

In our opinion, OKTA's lower valuation and steadier growth outlook outweigh Zscaler's faster current growth rate. For investors choosing between the two cybersecurity stocks today, Okta offers the more attractive risk-reward profile.

Currently, Okta carries a Zacks Rank #2 (Buy), making the stock a must-pick compared with Zscaler, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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