• Zscaler (NasdaqGS:ZS) is set to join the Nasdaq-100 Index, adding the stock to one of the most followed US equity benchmarks.
• The company is also being added to the Alger Russell Innovation Indexes, expanding its presence in AI and cloud focused benchmarks.
• These index changes link Zscaler more directly to themes around artificial intelligence adoption and cloud based cybersecurity.

Zscaler provides cloud security services that sit between users, applications, and the internet. This aligns with how enterprises are reworking their IT around remote access and software delivered over the cloud. As AI tools and data intensive workloads are rolled out, investors have been paying closer attention to companies tied to secure access and traffic inspection. Zscaler's business profile is often discussed alongside other cloud and AI exposed stocks that feature in major growth oriented indices.

For investors, inclusion in the Nasdaq-100 and Alger Russell Innovation Indexes can influence trading volumes, index fund ownership, and how the market compares Zscaler to other large tech and AI related stocks. While index additions do not change the underlying business, they can affect how the stock is perceived in multi asset portfolios and thematic funds that focus on growth, cloud, and AI security exposures.

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For Zscaler, joining both the Nasdaq-100 and Alger Russell Innovation Indexes ties the stock more tightly to AI and cloud security themes that many investors already associate with its Zero Trust platform. The move comes alongside fresh product launches in secure-access service edge (SASE), deeper integrations with partners like Gigamon and Oasis Security, and client wins around Zero Trust for branches and AI agents. Together, these developments position Zscaler alongside larger cybersecurity peers such as Palo Alto Networks, CrowdStrike, and Fortinet when institutional investors rebalance sector and AI-focused allocations. At the same time, index inclusion does not change the fact that Zscaler is still managing losses, relies on external borrowing, and operates in a competitive market for cloud security. Investors who care about business-model quality as much as index flows may treat this news as a prompt to revisit how Zscaler converts product breadth and AI-linked demand into sustainable profitability over time.

How This Fits Into The Zscaler Narrative

• The dual index inclusion lines up with the narrative that Zscaler is becoming a central Zero Trust and AI-security platform, supporting catalysts around broader platform adoption and larger multi-year deals.
• By increasing visibility alongside fast-growing peers, the news could raise expectations for execution on Zero Trust Everywhere and Data Security Everywhere, which may challenge the narrative if revenue growth or margins do not keep pace.
• The index changes link Zscaler more explicitly to AI-focused capital flows, an angle that is only partially reflected in the existing narrative, which focuses more on product breadth and long-term replacement of legacy appliances.

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The Risks and Rewards Investors Should Consider

• ⚠️ Stronger index and AI association could increase share price volatility, and analysts have already flagged a volatile share price over the past 3 months compared to the US market.
• ⚠️ Heightened visibility may intensify comparisons with competitors like Palo Alto Networks and CrowdStrike, increasing pressure on Zscaler to defend its Zero Trust differentiation and pricing power.
• 🎁 Index inclusion can broaden the shareholder base through passive funds and AI-focused mandates, reinforcing demand for Zscaler shares when benchmarks are rebalanced.
• 🎁 The move aligns with existing rewards analysts have highlighted, including the view that Zscaler is trading below some fair-value estimates and is exposed to growing cyber and AI security budgets.

What To Watch Going Forward

From here, investors may want to watch how Zscaler’s index inclusion translates into changes in trading volumes, ownership by index and thematic funds, and how frequently the stock is grouped with other AI and cybersecurity platforms in institutional allocations. It is also worth tracking whether recent product updates around Zero Trust SASE and AI-agent security lead to measurable progress in large enterprise wins and partnerships. Finally, keep an eye on how Zscaler balances growth-focused investments with its loss position and external funding, particularly if competitive responses from Palo Alto Networks, CrowdStrike, or cloud providers start to influence deal terms or contract sizes.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.