Zscaler partners with NVIDIA to boost AI in cybersecurity By Investing.com

LAS VEGAS – Zscaler, Inc. (NASDAQ:), a company specializing in cloud security, has announced a partnership with technology giant NVIDIA (NASDAQ:) to enhance its AI-powered cybersecurity services. This collaboration aims to integrate NVIDIA’s advanced AI technologies into Zscaler’s platform, with the goal of providing improved security and user experience for enterprise clients.

Zscaler plans to incorporate NVIDIA’s NIM inference microservices, NeMo Guardrails, and the Morpheus framework to bolster the data processing capabilities of its Zero Trust Exchange™ platform. The partnership is expected to significantly strengthen Zscaler’s ability to proactively defend against cyber threats and simplify IT and network operations.

The introduction of Zscaler ZDX Copilot, touted as a unique digital experience monitoring tool, is one of the key outcomes of this collaboration. Utilizing NVIDIA’s NeMo Guardrails, ZDX Copilot is designed to offer insights into network, device, and application performance, thereby enabling streamlined IT support and operations at an enterprise scale. NeMo Guardrails is particularly focused on ensuring the security and accuracy of smart applications that use large language models (LLMs).

Zscaler’s Zero Trust Exchange™ is reported to process over 400 billion transactions daily. By leveraging predictive and generative AI, Zscaler aims to rapidly identify and respond to threats and anomalies that were previously challenging to detect.

Furthermore, Zscaler will utilize NVIDIA Morpheus, an AI framework that assists developers in creating applications capable of filtering, processing, and classifying vast amounts of cybersecurity data. This is expected to enable real-time threat detection by optimizing AI pipelines. With NVIDIA NIM, Zscaler intends to offer scalable generative AI inferencing to enhance its data protection suite.

Punit Minocha, EVP of Business and Corporate Development at Zscaler, emphasized the importance of AI in maintaining a competitive edge in cybersecurity. NVIDIA’s vice president of strategic partnerships, Pat Lee, also highlighted the transformative impact of generative AI and accelerated computing across various industries.

News of this collaboration is based on a press release statement and marks a strategic move by Zscaler to advance its position in the cybersecurity market by partnering with NVIDIA, known for its robust AI software portfolio.

In other recent news, cloud-based information security company Zscaler has been a topic of interest following its third-quarter earnings results and subsequent analyst reports.

The company’s Q3 results exceeded expectations, reporting a 30% year-over-year increase in billings and a record operating margin, marking its first instance of GAAP profitability. Zscaler’s Dollar-Based Net Retention rate remained robust, showing strong upsell activities which contributed to a 31% year-over-year growth in customers with an annual recurring revenue of over $1 million.

Canaccord Genuity adjusted its price target for Zscaler to $220 from the previous $260, while maintaining a Buy rating. Evercore ISI also reduced the price target for Zscaler shares to $245 from $270, despite a robust fiscal third quarter performance by the company. TD Cowen maintained a Buy rating on Zscaler shares, with a steady price target of $270.00, highlighting the company’s 32% revenue growth.

Oppenheimer adjusted its outlook on Zscaler, reducing the price target on the company’s shares to $260 from the previous $290, while BMO Capital Markets raised its price target for Zscaler shares to $208 from $192.

InvestingPro Insights

As Zscaler, Inc. (NASDAQ:ZS) aligns with NVIDIA to enhance its AI-driven cybersecurity capabilities, the market is taking note of the company’s financial health and growth prospects. With a significant market capitalization of $27.8 billion, Zscaler is positioning itself as a heavyweight in cloud security.

The company’s commitment to innovation and growth is reflected in the positive outlook from analysts, who expect Zscaler’s net income to grow this year. This is supported by a remarkable 37.16% revenue growth over the last twelve months as of Q3 2024, signaling strong business momentum. Additionally, Zscaler’s gross profit margin stands at an impressive 77.94%, underscoring the company’s ability to maintain profitability in its operations.

Investors are also encouraged by Zscaler’s recent performance in the stock market, with an 8.73% return over the last week. This short-term uptick complements the company’s substantial return over the last year, which analysts attribute to its strategic initiatives and market positioning. With 34 analysts having revised their earnings upwards for the upcoming period, there is a consensus that Zscaler is on a trajectory for continued success.

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