Benzinga - by Zacks, Benzinga Contributor.
Zscaler, Inc. (NASDAQ: ZS) has announced a strategic collaboration with NVIDIA Corporation (NASDAQ: NVDA) to enhance its artificial intelligence-powered copilot technologies. This partnership is aimed at bolstering Zscaler's Zero Trust security capabilities by leveraging NVIDIA's advanced AI technologies. The integration promises to deliver significant improvements in user experience and security-centric copilot services to enterprises, positioning Zscaler at the forefront of cybersecurity innovation.
Enhancing Security With AI The collaboration introduces NVIDIA's AI technologies, including NIM inference microservices, NeMo Guardrails and the Morpheus framework, to Zscaler's Zero Trust Exchange platform. These integrations should amplify Zscaler's ability to process vast amounts of data, enhancing its proactive threat defense mechanisms and streamlining its IT and network operations. With the Zero Trust Exchange processing more than 400 billion transactions daily, the inclusion of NVIDIA's AI tools should significantly boost threat detection and mitigation capabilities.
A key feature of this partnership is the development of the Zscaler ZDX Copilot, a digital experience monitoring tool powered by NVIDIA NeMo Guardrails, which ensures the security and appropriateness of AI-driven applications, protecting organizations by overseeing generative AI systems.
The integration of NVIDIA Morpheus into Zscaler's platform facilitates real-time threat detection through a GPU-accelerated AI framework. Additionally, NVIDIA NIM's microservices support the deployment of generative AI models, enhancing Zscaler's data protection suite with advanced, scalable security solutions.
This partnership highlights Zscaler's commitment to advancing its cybersecurity solutions through AI. The integration of NVIDIA's AI technologies positions Zscaler at the forefront of cybersecurity innovation, offering enterprises robust and scalable security measures.
Zscaler's year-to-date (YTD) share price performance has been marked by significant volatility. The ZS stock has lost 15.2% YTD against the Zacks Internet – Services industry's growth of 4.6%.
Zscaler, Inc. Price and Consensus Zscaler, Inc. price-consensus-chart | Zscaler, Inc. Quote
Strong Partner Base Aids Prospects Zscaler's strategic partnerships with major technology providers, including Microsoft (NASDAQ: MSFT) and Amazon's (NASDAQ: AMZN) Amazon Web Services ("AWS"), have further bolstered its market presence and enhanced cloud security offerings.
Zscaler's collaboration with Microsoft involves integrating its Zero Trust Exchange platform with Microsoft Azure Active Directory. This integration ensures secure, seamless access to applications and data, reinforcing cybersecurity for organizations by leveraging Microsoft's cloud infrastructure.
With Amazon's AWS, Zscaler offers advanced security solutions tailored for AWS environments. This partnership should enable customers to securely migrate and operate within the AWS cloud, ensuring protection of data and applications.
These strategic alliances with Microsoft and Amazon enable Zscaler to provide state-of-the-art security solutions, ensuring secure digital transformation for enterprises. By leveraging these collaborations, Zscaler strengthens its market position and continues to innovate in the dynamic cybersecurity landscape.
Final Thoughts A strong portfolio, along with a commitment to innovation and a sustained focus on expanding the customer base, reflects solid top-line growth potential over the long run. The growing demand for cloud security solutions and Zscaler's strategic market positioning provide a solid foundation for continued growth.
Despite its strengths, Zscaler faces several risks that can undermine this Zacks Rank #3 (Hold) company's near-term prospects.
The global economic environment remains uncertain, with potential headwinds from protracted inflationary conditions, still-high interest rates and geopolitical tensions. These factors could adversely impact enterprise spending on software and IT services.
Moreover, Zscaler's valuation looks stretched at the current level, as reflected by the Value Score of F. We note that Zscaler currently has a one-year forward 12-month P/E ratio of 54.68. This level compares unfavorably to the industry's average of 22.44. Hence, it would be prudent for investors to wait for a better entry time.
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