Meet the Artificial Intelligence (AI) Stock That's Crushing Nvidia on the Market in 2025

Zscaler (ZS) has significantly outperformed Nvidia (NVDA) in 2025, with its stock surging 59% compared to Nvidia's 32% gain, driven by its expanding AI-centric cybersecurity solutions. The company reported fiscal year 2025 revenue of $2.7 billion, up 23%, and saw its remaining performance obligations (RPO) jump 31% to $5.8 billion, indicating strong contractual backlog and future growth, particularly in high-growth areas like agentic AI, which saw an 85% rise in annual recurring revenue. Positioned as a compelling AI investment, Zscaler's valuation at 16 times sales is considered more attractive than Nvidia's 25 times sales, suggesting potential for continued outperformance as its growth trajectory is expected to exceed analyst forecasts.

Analysis

Zscaler (ZS) is demonstrating significant momentum, with its stock appreciating 59% in 2025, substantially outperforming Nvidia's (NVDA) 32% gain. This performance is underpinned by strong fundamental growth, including a 23% increase in fiscal year 2025 revenue to $2.7 billion, which outpaces the projected 17% annual growth of the broader zero-trust security market. A key forward-looking indicator is the 31% year-over-year surge in Remaining Performance Obligations (RPO) to $5.8 billion, a figure more than double its recent annual revenue. The acceleration of RPO growth relative to its 21% quarterly revenue increase suggests an expanding contractual backlog and strengthening future demand. This is largely attributed to the company's successful pivot into AI-centric cybersecurity, where its agentic security operations saw annual recurring revenue (ARR) grow by an impressive 85%. While trading at 16 times sales—a premium to the technology sector's 8.5 average—it is positioned as a more attractively valued alternative to Nvidia's 25 times sales multiple, especially given Zscaler's potential for sustained high growth compared to the potential tapering of Nvidia's growth rate from a much higher base.

Key Decisions for Investors

• Investors seeking high-growth AI exposure beyond semiconductor manufacturing should evaluate Zscaler, given its accelerating contractual backlog (RPO) and leadership in the fast-growing agentic AI cybersecurity niche.
• Considering Zscaler's valuation at 16 times sales versus Nvidia's 25 times, a relative value assessment may favor Zscaler for investors concerned about Nvidia's near-term headwinds and elevated valuation.
• Future investment decisions should closely monitor the growth rate of Zscaler's RPO and AI-related ARR, as continued strength in these metrics is critical to justifying its premium valuation and supporting the thesis of growth acceleration.
• While the outlook is positive, investors should remain aware that the stock trades at a significant premium to the broader tech sector, making it susceptible to volatility and shifts in market sentiment towards high-growth equities.