Why Investors Are Targeting Zscaler and Confluent Stocks Now

Analysts Agree: Zscaler and Confluent Are Worth Watching

Investors often rely on Wall Street analysts to gauge the potential of stocks, especially when a consensus forms around multiple ratings for a stock. Currently, shares of Zscaler (NASDAQ: ZS) and Confluent (NASDAQ: CFLT) are standing out in this regard, with analysts recommending strong buy ratings for both. This information can be particularly valuable, hinting at positive opportunities on the horizon.

Interestingly, both Zscaler and Confluent have been reported as trading significantly below their peak values achieved during the tech boom of 2021, with declines of 54% and 79%, respectively. However, this dip presents an attractive buying opportunity, highlighted by their continued revenue growth and technological advancements in an increasingly AI-driven world.

Shining a Light on Zscaler

In today's world, businesses are heavily reliant on cloud computing, which connects their operations to a global market. While this technology is beneficial, it also opens the door to potential cybersecurity threats. Zscaler's innovative approach through its Zero Trust Exchange safeguards organizations by treating every login as a potential threat, ensuring robust security measures are in place.

This security platform utilizes artificial intelligence to evaluate login attempts in real time. By analyzing user credentials and device information, Zscaler ensures that only legitimate access is permitted. Particularly beneficial for organizations with remote workers, this system provides security without sacrificing speed.

Zscaler goes beyond typical security measures by allowing employees to access only necessary cloud applications for their jobs. This added layer of security means that even if a hacker breaches the identity verification phase, they won’t gain entry to the entire network.

Recently, Zscaler has introduced tools that leverage AI to enhance its existing offerings, such as Risk360. This tool assesses multiple risk factors within a company's digital ecosystem, determining vulnerabilities and potential financial impacts in case of cyberattacks. The rapid uptake of these AI solutions is already reflecting positively on the company's upselling strategies.

Fiscal year 2024 saw Zscaler generate revenues of $2.167 billion, marking a 34% increase from the previous fiscal year. This exceeded management expectations and demonstrated strong positioning in a potential market valued at $96 billion, indicating significant room for further growth.

Why Confluent Is Making Waves

Data streaming technology is the backbone of many digital experiences we engage with daily. Whether it's real-time updates from stock markets or ensuring that online retailers can provide accurate stock information, Confluent is at the forefront of facilitating these processes. Currently serving over 5,440 customers, including notable names like Walmart, Citigroup, and BMW, Confluent's potential in the data streaming and AI market is substantial.

The rise of AI has transformed the landscape for data consumption, making it crucial for applications to adeptly manage and analyze data in real time. As demand grows for data pipelines that can support innovative AI applications, Confluent stands ready to meet that need. A survey indicates that a staggering 90% of IT professionals believe data streaming will significantly spur innovation in the AI sector.

To illustrate its importance, consider how a data-driven chatbot could redefine customer service. By using Confluent’s solutions, an airline can process and deliver real-time flight information directly to customers, streamlining the user experience and enhancing operational efficiency.

Currently, Confluent's trailing-12-month revenue amounts to $865 million, but this remains small compared to its expansive $60 billion addressable market. Similar to Zscaler, Confluent's stock hit inflated prices during the tech surge of 2021 but has since returned to a more reasonable price-to-sales (P/S) ratio of 7.1, positioning it favorably for growth.

Investment Outlook for Zscaler and Confluent

Examining Zscaler's and Confluent's performance, it’s clear that both hold promise as compelling investment options. Analysts predict significant potential in the near future due to their growth trajectories and expanding addressable markets. With increasing adoption of AI and data streaming in various sectors, these companies are poised to capitalize on emerging trends.

Frequently Asked Questions

What are the main attractions of investing in Zscaler?

Zscaler has demonstrated strong revenue growth, particularly in the cybersecurity space, using advanced AI technology to enhance its offerings, making it a compelling investment opportunity.

Why is Confluent considered a major player in AI?

Confluent facilitates real-time data streaming, essential for powering AI applications, which significantly drives demand for its services across various industries.

How do Zscaler and Confluent's stock prices compare to their highs?

Both companies' stocks are currently trading much lower than their all-time highs, with Zscaler down 54% and Confluent down 79%, presenting potential buying opportunities.

What is the revenue outlook for Zscaler?

Zscaler recently reported revenues of $2.167 billion for fiscal year 2024, reflecting strong growth and a favorable position within a large addressable market.

What are analyst sentiments on Zscaler and Confluent stocks?

Overwhelmingly, analysts have given strong buy ratings on both stocks, indicating positive sentiment and potential for upside in the near future.

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