Zscaler's 39% stock plunge sparks debate over cybersecurity's future

Geopolitical turmoil has markets on edge, and tech stocks are taking the hit. Volatility is high, nerves are even higher, and prices are swinging more on fear than facts.

Wedbush Securities' Dan Ives believes that the bigger picture has not cracked, at least not yet. He calls this a "white-knuckle" phase, sure, but also says the market is getting it wrong. Right now, tech stocks are trading as if growth is slowing, when in reality the AI wave is still charging ahead. Nearly $4 trillion is in spending, and in his words, "nothing's changed." If anything, it is picking up speed.

But he is not ignoring the risks. If macro pressure drags into the summer, numbers could feel the heat. But if things stay contained, it would mean that it is a bump in the road. Within that broader wave, an industry that stands out as a quiet powerhouse is cybersecurity. Ives calls it one of the most mispriced corners of tech right now, with budgets expected to double from 5% to 10% of IT spend as companies scramble to protect data in an artificial intelligence (AI)-first world.

That brings the spotlight to Zscaler (ZS), which helps businesses secure users and data through a cloud-native model built for this new reality. Yet, even with strong fundamentals, the stock has taken a sharp hit, dropping 39% just three months into 2026. But Dan Ives sees a gap opening up, and is essentially telling investors this might be the moment to grab ZS stock.

With a market cap of $22 billion, San Jose-based Zscaler is a pioneer in cybersecurity innovation, carving out a strong position as a global leader in zero trust security. The company's core strength lies in its Zero Trust Exchange platform, a cloud-native solution that secures users, apps, and data without relying on traditional networks.

Trusted by large enterprises, governments, and critical infrastructure players, Zscaler helps organizations safely accelerate digital transformation. Its platform runs across more than 160 data centers worldwide, using AI to block billions of cyber threats daily while simplifying security, cutting costs, and boosting productivity in an increasingly connected, high-risk digital world.