What Happened?
Shares of cloud security platform Zscaler (NASDAQ:ZS) jumped 10% in the afternoon session after investment firm Guggenheim upgraded the stock to “Buy” from “Neutral,” setting a new price target of $214.
The upgrade reflects a significant shift in sentiment, especially as other firms like Wells Fargo and Evercore ISI Group have recently lowered their targets. This mixed sentiment from analysts followed Zscaler’s third-quarter results, which surpassed estimates for revenue and earnings. However, the company also provided a weaker outlook for the remainder of its fiscal year, which fell below Wall Street expectations. Guggenheim’s positive move suggests it sees potential for substantial growth despite the more cautious stance from other analysts.
A fresh catalyst added further lift: at Computex in Taiwan, Nvidia CEO Jensen Huang explicitly backed enterprise software firms in the AI era. It is an “incredible time” to be a software company, Huang added.
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What Is The Market Telling Us
Zscaler’s shares are very volatile and have had 22 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 4.7% after Snowflake’s impressive earnings results provided the clearer evidence that the “SaaSpocalypse” — a rolling selloff that had erased approximately $2 trillion from software market values since late 2025 on fears that AI would make subscription software obsolete — had been overstated for platforms sitting at the centre of AI workflows.
Snowflake surged 35%, its best single day ever, after reporting that AI accounts on its platform jumped from 9,100 to 13,600 in a single quarter, product revenue grew 34%, and full-year guidance was raised by $180 million. The read-through was immediate. ServiceNow gained 5%, Palantir rose nearly 6%, Oracle and Microsoft each added roughly 3%, and a broad wave lifted the iShares Expanded Tech-Software Sector ETF (IGV).
The SaaSpocalypse thesis rested on a simple fear: that autonomous AI agents would replace per-seat software licences, hollowing out established SaaS business models. Snowflake’s results inverted that logic directly. Instead of AI displacing its platform, AI drove more consumption of it.
CFO Brian Robins described Cortex Code as creating a “step function change” in AI revenue potential, and said it was the single largest driver of the full-year guidance raise. Enterprises are not replacing data platforms with AI; they are using AI to generate more workloads that run on those same platforms.
