Zscaler shares drop 34% YTD but show 49% upside with strong fundamentals and AI-driven growth potential.

Zscaler's stock has fallen 34% year-to-date amid AI-related market fears, but the company maintains strong fundamentals including over 23% revenue growth, roughly 32% free cash flow margins, and a $1.65 billion net cash position. Positioned to benefit from the growing adoption of zero-trust security, Zscaler is expected to gain market share and expand margins, potentially increasing its valuation by 49% over the next 2.2 years as AI shifts from a threat to an enabler. Risks include competition, retention challenges, and macroeconomic factors, but strategic AI investments support a positive long-term outlook.