Is Zscaler’s Moat Wide Enough to Hold Off Competition?

When investors talk about Zscaler, one word comes up again and again: moat. Not the castle kind, but the strategic kind—those structural defenses that keep rivals at bay. The question is whether Zscaler’s moat is wide enough to withstand the fierce competition in cybersecurity and cloud infrastructure.

Zscaler does have some real advantages that resemble a protective moat. One is the high switching cost. Once an enterprise runs its traffic, policy enforcement, and threat inspection through Zscaler’s Zero Trust Exchange, ripping it out for another vendor isn’t easy. It’s expensive, risky, and disruptive. That lock-in has translated into customer retention in the high-90% range, which is pretty sticky in a market where buyers constantly evaluate new tools. On top of that, Zscaler’s fully cloud-native architecture gives it a head start compared to older vendors that still wrestle with appliance-based solutions. Processing billions of transactions daily also feeds its detection AI with unparalleled data scale—a flywheel effect that keeps getting stronger.

Zscaler hasn’t stood still either. It’s been pushing into adjacent areas, buying companies like Red Canary, Avalor, and Airgap, and steadily broadening its product stack. The strategy is simple: move from being a best-in-class zero-trust vendor to being a fuller security platform, so customers are less tempted to consolidate with bigger incumbents. That’s how a moat is reinforced.

Still, there are cracks. The likes of Cisco, Palo Alto Networks, Fortinet, and Check Point have entrenched customer bases and wide product portfolios. In many enterprise deals, the appeal of “one vendor for everything” can trump Zscaler’s specialization. Add in the brutal pace of cybersecurity innovation—if Zscaler slips even briefly, confidence can erode fast. There’s also a valuation problem: much of its “moat premium” is already priced into the stock, leaving little room for disappointment if growth moderates. That’s why firms like Morningstar still classify Zscaler as having only a *narrow moat*.

So, wide enough? For now, yes. Zscaler’s moat is sturdy in its core zero-trust stronghold, and enterprises that have already adopted it are unlikely to switch. But it isn’t impregnable. The competitive landscape is crowded, and the company will need relentless innovation and smart expansion to keep that moat from being breached.