Zscaler vs. Cisco: Cybersecurity Stocks Show Different Growth Paths

Zscaler and Cisco Systems are two prominent companies in the rapidly growing enterprise cybersecurity market. Zscaler focuses on cloud-native security, zero-trust access, SASE, and AI security, while Cisco combines cybersecurity with networking, observability, and infrastructure.

Zscaler has been posting strong financial results, with revenue increasing 24.9% year-over-year to $898.2 million in the fourth quarter of fiscal 2026. Non-GAAP earnings per share jumped 33.7% to $1.19, and annual recurring revenue (ARR) rose 25% to $3.77 billion.

However, Zscaler's growth is slowing down, with management projecting roughly 17% growth in both revenues and ARR for fiscal 2027. The company is investing heavily in infrastructure spending, which could justify higher capital expenditures. But the problem lies in the fact that spending is rising while revenue and ARR growth are expected to slow.

Cisco, on the other hand, has a much larger revenue base and a more diversified business model. In the fourth quarter of fiscal 2026, Cisco's revenues rose 18% to $17.25 billion, and non-GAAP EPS increased 23% to $1.22. The company is seeing strong growth in AI infrastructure and networking, with $9.3 billion of hyperscaler AI infrastructure orders in fiscal 2026.

Cisco's valuation gap favors it compared to Zscaler, with a forward 12-month price-to-sales (P/S) multiple of 5.80 versus Zscaler's 8.53. Cisco's lower P/S multiple comes alongside much larger revenues and stronger absolute cash generation.