Zscaler or CrowdStrike: Which Is the Better Buy in 2025?
One stock’s just warming up—while the other looks overbought.
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Zscaler (NASDAQ: ZS) and CrowdStrike (NASDAQ: CRWD) are both buyable stocks supported by robust trends promising to drive a solid double-digit revenue CAGR for years. They both grow at an above-industry pace and are well-positioned in an industry projected to grow slower than the pace of threats it intends to prevent.
Cybersecurity growth is forecasted to have a 9% CAGR, compared to the 15% CAGR driven by cyber threats. The problem is that one of these markets is already pricing much of the growth. The takeaway is that both are well-supported and have a long runway for success, but one is a better buy in 2025 due to market dynamics.
Where one stock is moving up from its low, on track to retest its long-term highs, and driven by analyst trends, the other is already well above the comparable highs and extended, with analysts trimming their sentiment. The better buy is Zscaler, with potential for a double-digit increase this year and next, while the poorer is CrowdStrike, set up to pull back and offer a more attractive entry later this year.
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Analysts Shift Saps Enthusiasm for CrowdStrike
To be fair, CrowdStrike’s headwind is minimal, but it is a factor that investors and traders should take note of.
As of early July, the analysts' trends are bullish but reflect a more cautious tone than last year.
There are an increasing number of Sell and Hold ratings, a declining number of Buys, and a 10% downside at the consensus.
The June activity includes two downgrades from Outperform/Overweight levels to Hold/Neutral equivalents, and more are expected.
CrowdStrike is a solid growth company, but it is highly valued at over 55x the 2030 EPS outlook.
Zscaler’s analyst trends are far more robust and capable of driving its share price even higher. The June and early July activity includes numerous price target increases, upgrades, and no reductions. The net result is increased coverage, a firmer Moderate Buy rating, and 5% increase in the consensus price target.
The consensus lags behind the price action in early July, but by a narrower 5% margin, and is rising, providing support for the market. The range of June/July targets positions Zscaler stock well above the broad consensus and near the high end of $385, a new all-time high when reached.
Zscaler Chart Screams Buy Me! CrowdStrike Urges Caution
CrowdStrike’s chart action isn’t overtly bearish but offers risk to new investors. The market is trading at an all-time high with diminishing analyst support and indications that it is overbought. The caveat is that institutional support remains solid, with them buying on balance in Q1 and Q2.
The likely outcome is that a price pullback will catalyze a buying opportunity, and the price action will not correct significantly. The risk for investors is that CRWD shares will enter a protracted consolidation and trading range that could last until earnings catch up with the valuation or the outlook is improved.
Zscaler's price action, on the other hand, is overtly bullish. The market for this stock rallied strongly in Q2 and is waving a bull flag in early Q3. The Bull Flag is a continuation pattern signaling that the rally is, at best, half over. In this scenario, the market for Zscaler stock can advance by another $150 and easily surpass the analyst's highest target.
The catalyst for Zscaler’s new highs will likely be its Q4 earnings report.
The company issued favorable guidance at the end of Q3 and showed signs of growing momentum, suggesting that outperformance is possible. Those include the calculated billings and deferred revenue, which grew faster than reported revenue, the increased client count, and strength in AI-focused security.
Written by Thomas Hughes
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