Wells Fargo Upgrades Zscaler (ZS) Stock, Lifts PT

Zscaler, Inc. (NASDAQ:ZS) is one of the 10 software stocks analysts are upgrading. On June 13, Wells Fargo upgraded the company’s stock to “Overweight” from “Equal Weight,” lifting the price objective to $385 from the previous target of $260. As per the firm, software infrastructure spending in H2 2025 is expected to be driven by the adoption of agentic AI, which tends to benefit several software companies, including Zscaler, Inc. (NASDAQ:ZS).

An employee standing in front of a large data center, looking toward the future of cloud security.

The research firm cited Zscaler, Inc. (NASDAQ:ZS)’s potential to reach $5 billion in annual recurring revenue by fiscal 2027 as one of the measures of the upgrade. Despite the increase in the stock price YTD, the firm believes it still possesses significant room for multiple expansion. Well Fargo expects more than 20% billings growth in FY 2026 and continues to see margin expansion continuing, together with revenue growth. Notably, the company’s stock has increased by ~66% on a YTD basis.

In May 2025, Zscaler, Inc. (NASDAQ:ZS) signed a definitive agreement to acquire Red Canary, which is a leading managed detection and response (MDR) vendor. Through the combination of Zscaler, Inc. (NASDAQ:ZS)’s high-volume and high-quality data with Red Canary’s domain expertise in MDR, Zscaler, Inc. (NASDAQ:ZS) plans to ramp up its vision to deliver AI-powered security operations.

While we acknowledge the potential of ZS to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than ZS and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.