Zscaler posts record Q4 earnings and AI-driven demand as shares slip amid short‑seller scrutiny

ZS delivered a record fourth‑quarter for fiscal 2026, posting annual recurring revenue (ARR) that rose 25% and revenue growth of 25% at scale, with annual recurring revenue reaching $3.771 billion, according to the company's earnings briefing and a CNBC interview with CEO Jay Chaudhry. The results beat expectations across the board and were driven by heightened demand for AI‑enabled cybersecurity solutions, a trend the CEO emphasized as a key growth catalyst.

The strong performance came despite broader concerns about a slowdown in Zscaler's growth trajectory, a point raised in analyst commentary that the company's pace may be moderating even as it remains ahead of many peers. Additionally, Seeking Alpha noted that Zscaler trades at a lower valuation relative to other cybersecurity names, suggesting a price advantage that may attract value‑focused investors.

Market reaction was mixed. Shares dipped about 4.5% following the release. The pullback landed alongside a record non‑GAAP operating margin of 24%, so the market's hesitation sat with the growth outlook rather than with profitability.

Adding to the narrative, Jim Cramer on Yahoo Finance pointed out that a large number of investors are shorting Zscaler, suggesting heightened speculation around the stock's valuation and future performance. The convergence of record earnings, AI‑driven demand, valuation discounts, and short‑seller activity creates a nuanced outlook: while the company's fundamentals appear solid, investors will be watching for any signs of sustained growth deceleration and the impact of short‑seller pressure on price volatility.