Cisco's Diversified Business Model Gives It an Edge Over Zscaler in Cybersecurity

Zscaler and Cisco are both prominent players in the growing enterprise cybersecurity market. Zscaler focuses on cloud-native security solutions, specifically zero-trust access, Secure Access Service Edge (SASE), and AI-powered security. On the other hand, Cisco combines cybersecurity with networking, observability, and infrastructure capabilities.

Zscaler's recent financial results show solid growth, but the company's revenue growth is slowing down to around 17%. In its fourth quarter of fiscal 2026, Zscaler reported a 24.9% year-over-year increase in revenues to $898.2 million, while non-GAAP earnings per share rose 33.7% to $1.19. Annual recurring revenue (ARR) also increased by 25% to $3.77 billion.

Cisco, with its more diversified business model, saw a 18% year-over-year increase in revenues to $17.25 billion in the fourth quarter of fiscal 2026. Non-GAAP earnings per share rose 23% to $1.22, and operating cash flow reached $5.39 billion.

Cisco's growth drivers include its AI infrastructure and networking capabilities. The company received $9.3 billion in hyperscaler AI infrastructure orders in fiscal 2026, which is about 4.5 times the level of the previous year. It recognized around $4 billion of AI infrastructure revenues in fiscal 2026 and expects this figure to rise to $7.5 billion in fiscal 2027.

The valuation gap favors Cisco from a multiple perspective, with Zscaler trading at a forward 12-month price-to-sales (P/S) multiple of 8.53 compared to 5.80 for Cisco.