Zscaler (NASDAQ: ZS | ZS Price Prediction) founder and CEO Jay Chaudhry used the company’s latest earnings call to sharpen a thesis becoming the bull case for cybersecurity: autonomous AI agents will soon outnumber human users on corporate networks, and each needs security. On a recent Motley Fool Money segment titled The Invisible Layer Protecting the World’s Biggest Companies, the host framed it directly: “Today we protect more than 50 million users, and tomorrow that could be millions or billions of agents that are doing work on behalf of organizations.”
Chaudhry tightened the timeline during the Q3 FY2026 call. “We expect it will not be long before millions of AI agents have access to organizations’ mission-critical applications and sensitive data,” he said. “Today, users are the weakest link in cybersecurity. But soon, AI agents will be the weakest link, because they operate at far greater speed and have far less oversight. Even a single compromised agent can move to data theft in minutes.”
Why the “billions of agents” framing matters now
Zscaler reported fiscal Q3 results on May 26, 2026, posting revenue of $850.48 million, up 25.43% year over year, with non-GAAP EPS of $1.08, the company’s ninth consecutive EPS beat. Annual recurring revenue reached $3.525 billion on 25% growth, and management raised full-year FY2026 EPS guidance to $4.10 to $4.11.
The market reaction was harsh. ZS opened at $182.73 at filing and trades around $129.52 today, down 41.85% year to date. The sticking point was the reduced free cash flow margin outlook of 22.8% to 23.3%, down from 26.5% to 27%, as capex rises to support the AI buildout.
The architecture behind the pitch
Zscaler’s argument rests on two ideas for non-human identities: hide applications so attackers cannot find them, and eliminate lateral movement once inside. To extend that to agents, Zscaler announced its intent to acquire Symmetry Systems on May 21st, whose access graph maps how identities, applications, and data sources connect across the enterprise. Chaudhry confirmed the company’s Project Glasswing partnership with Anthropic and DayBreak partnership with OpenAI, giving Zscaler engineers early access to frontier models discovering vulnerabilities at machine speed.
That is the threat side of the thesis. “Frontier models are multiplying these unremediated vulnerabilities by as much as 10x,” Chaudhry said. Customer urgency shows in bookings: Zscaler’s AI Protect product crossed $100 million in bookings over the past 12 months, and Zero Trust Everywhere customer count grew to 700+ enterprises from 550+ in Q2.
How Palo Alto Networks fits the same story
Palo Alto Networks (NASDAQ: PANW) reported one week later and validated the demand signal from the other side of the platform debate. Q3 FY2026 revenue rose 31.15% to $3.00 billion, and next-generation security ARR jumped 60% year over year to $8.10 billion. CEO Nikesh Arora attributed the acceleration to “accelerating organic bookings growth as customers turn to us to secure their AI deployments at scale.”
PANW is up 47.69% year to date, a striking divergence given that both CEOs tell the same story about agentic AI demand. Investors rewarded Palo Alto’s platformization push, including CyberArk and Chronosphere acquisitions that contributed $388 million to the quarter, while penalizing Zscaler’s heavier near-term capex profile.
What to watch next
Chaudhry pushed the agent opportunity timeline past Q4. “We are not factoring in any meaningful impact of these new opportunities for Q4, but I do believe we will have an impact in fiscal 27,” he said. CFO Kevin Rubin offered a preliminary FY27 ARR and revenue growth outlook of 16% to 17%, a deceleration that the “billions of agents” narrative must reverse. The Symmetry Systems close, AI Protect bookings cadence, and monetization tied to OpenAI and Anthropic integrations are markers worth tracking through the back half of calendar 2026.
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