Cybercrime is forecast to cause a staggering $10.5 trillion in damage to the global economy in 2025 alone, according to a report from Cybersecurity Ventures. Unfortunately, that number will probably grow even bigger in the years to come as businesses shift more of their operations online (increasing their vulnerability) and as technologies like artificial intelligence (AI) make it easier than ever for malicious actors to launch attacks.
Many cybersecurity vendors are now using AI in their products to automate threat detection and incident response, which should help enterprises navigate those challenges. Zscaler(NASDAQ: ZS) and SentinelOne(NYSE: S) are two providers moving swiftly in that direction, and they could experience significant long-term growth as a result.
The recent correction in the broader stock market has created an opportunity for investors to buy both stocks at a discount to their 2025 high points. Here's why they might want to do just that.
Image source: Getty Images.
The case for Zscaler
Zscaler helps organizations plug vulnerabilities caused by their remote workforces, digital applications, and complex cloud networks. It starts with the Zero Trust Exchange, which ring-fences valuable digital assets to not only prevent breaches, but also minimize the potential damage if a sophisticated attack is successful.
For example, the Zero Trust Exchange treats every login attempt as hostile. A simple username and password isn't enough verification in the modern age, so the platform also analyzes the employee's location and the device they are using to confirm it's really them. This is a must for any company with remote workers because managers can't physically see them in the office, so there is no other way to determine if their credentials have been stolen.
But the Zero Trust Exchange goes even further because it only connects employees to the digital applications they need to complete their jobs, not the entire network. Therefore, if a malicious actor does successfully bypass the identity layer, they can't move laterally to access all of the organization's valuable digital assets or data.
AI plays a significant role in these processes. It's the reason Zscaler can analyze every login attempt so thoroughly in a matter of seconds, and since the company processes over 500 billion transactions (a transaction is an action on the exchange, like a login) every single day, its AI models are constantly improving.
Last year, Zscaler introduced a new segment to its platform called Zero Trust Branch. It allows organizations to process every warehouse, manufacturing facility, and device through the Zero Trust Exchange, effectively detaching it from the rest of the corporate network. This ensures that if any of those assets are compromised by a cyberattack, they are isolated from the rest of the organization so the hackers can't cause any further damage.
Zero Trust Branch brings Zscaler one step closer to creating a "Zero Trust Everywhere" world, where every corner of the enterprise runs securely through its exchange. Zscaler said 130 of its customers had adopted the Zero Trust Everywhere approach at the end of the fiscal 2025 second quarter (ended Jan. 31), but it wants to triple that figure over the next 18 months. Moreover, the company has 7,700 customers in total, so there is a long runway for growth.
Zscaler generated $647.9 million in revenue during Q2, which was up 23% year over year, and above management's guidance of $634 million. As a result, the company increased its revenue forecast for the fiscal 2025 full year, which highlights the strength of the demand environment.
Zscaler stock is down 8.5% from its 2025 peak, and it's still down 46% from its all-time high, which was set during the tech frenzy in 2021. As a result, there is no time like the present to build a long-term position in this cybersecurity powerhouse.
The case for SentinelOne
SentinelOne's Singularity platform is a holistic answer to the challenges modern businesses face in cyberspace. It protects cloud networks, employee identities, endpoints (computers and devices), and everything in between. AI isn't just a supplemental tool for Singularity, it's at the very core of the platform and powers every feature.
For example, the Storyline feature autonomously tracks security events across the enterprise, and it uses that data to provide complete summaries to cybersecurity managers, which saves them hours of manual investigative work when a breach occurs. Then there is one-click rollback, which enables managers to instantly restore their organization's networks to their pre-breach state to minimize disruptions after an attack.
Purple AI ties the Singularity platform together. It's an AI-powered virtual assistant that can understand natural language, so it can turn almost any employee into a cybersecurity expert. It can be prompted to hunt for a specific threat, dig deeper into an incident, and uncover hidden risks within the enterprise.
SentinelOne was a standout performer in the 2024 MITRE ATT&CK Evaluations, which measure a cybersecurity vendor's ability to mitigate a range of different threats. It produced 88% fewer alerts than the median result across all participants, which means its AI-powered platform handled significantly more incidents autonomously compared to the competition. Moreover, SentinelOne delivered 100% accuracy with zero detection delays, which means it identified every threat in real-time.
The company says many organizations face over 1,000 security alerts every day, so human-driven processes are becoming more vulnerable over time. Every alert a human cybersecurity manager misses could create a catastrophic vulnerability for their organization, so AI and automation are no longer a luxury, but a necessity.
SentinelOne generated a record $821.5 million in revenue during its fiscal year 2025 (ended Jan. 31), which was a 32% increase from the previous year. The company is growing faster than most of its competitors including Zscaler, CrowdStrike, and Palo Alto Networks, yet its stock is significantly cheaper than all of them based on its current price-to-sales (P/S) ratio:
SentinelOne stock is down 27% from its peak this year, but it's also down 76% from its record high, which was set during the tech frenzy in 2021. Its valuation was unsustainable back then, but the steep drop in its stock combined with the company's solid revenue growth have created a very enticing opportunity for investors here.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CrowdStrike and Zscaler. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
