Zscaler CEO delivers a sharp take on AI agents

Most cybersecurity CEOs, if not every other, are talking about Artificial Intelligence (AI) agents right now. And we are seeing most of them often use the same vague language about "securing the future of work." Well, Jay Chaudhry looks like he’s different.

Speaking on CNBC's "The Exchange" on June 9, the Zscaler (ZS) founder, chairman, and CEO delivered a blunt assessment of where AI security is headed, and why the entire architecture of cybersecurity needs to change to handle it. 

Chaudhry continued to say that "agents run at machine speed. The numbers grow big time. They need no break, no sleep."

ZS is down 43.28% year-to-date and 57.68% over the past year, according to Yahoo Finance. That’s a brutal stretch for a stock that has fallen alongside broader software multiple compression. 

Chaudhry's comments are a reminder of why Zscaler's underlying architecture matters regardless of where the stock price sits.

Also Read: Zscaler Inc. Latest News

Why Zscaler CEO says zero trust is the only model that works for AI agents

The core of Chaudhry's argument is that traditional security of firewalls and VPNs was built on a 30-year-old premise: keep the bad guys out, let the good guys in. 

"Who is in? Who is out? Everyone is everywhere. And agents will be running from various locations," Chaudhry said.

Zscaler's zero trust model flips that premise entirely. Nobody is trusted by default. Not users, not agents. Everything routes through Zscaler's exchange, which validates identity and connects each request only to the specific application it needs. 

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"We have over 50 million users from over 45% of Fortune 500 companies who use it today," Chaudhry said. "We're simply extending that architecture to include agents."

The specific technical challenge he described is secure agent-to-agent and agent-to-application communication. 

"The best approach to have secure communication among agents or agents through applications is to have an exchange technology that we pioneered," Chaudhry added. 

"This group of agents can only access this group of applications. That's a big deal. We got lots and lots of customers waiting for this technology so they can start rolling out their agent solutions."

Bloomberg via Getty Images

How the chip crunch is, and isn't affecting Zscaler

Asked directly about rising memory and processing costs, Chaudhry gave a refreshingly proportionate answer. 

Zscaler operates infrastructure across 160+ locations globally, acting as a checkpoint that inspects customer traffic in real time. Rising component costs do affect the infrastructure.

But Chaudhry was clear about the scale of the impact. "If we were shipping thousands of boxes like firewall companies do, it'll be a big impact. It has some impact on us, but not in a meaningful way," he said.

Related: Zscaler CEO’s 2-word warning leads to $8B market cap loss

That distinction matters. Legacy firewall vendors ship physical hardware boxes to every customer site — hardware that gets directly hit by memory and chip cost inflation at scale. 

Zscaler's cloud-delivered model means the company absorbs infrastructure costs centrally across 160+ locations rather than multiplying them across thousands of customer deployments.

Why OpenAI and Anthropic going public is a "tailwind" for Zscaler

Chaudhry's framing of frontier AI lab IPOs was unambiguous. 

"Model companies going public is a good thing. It's a tailwind for us," Chaudhry said in the interview.

"As these models are maturing, enterprises can use more and more agentic applications. More adoption of agentic technology means more need for cybersecurity. That's where we come in."

He drew a sharp line between "old school" and "new school" cybersecurity. "Old school, firewall-based stuff is not going to work. We pioneered zero trust," Chaudhry said.

Zscaler Q3 fiscal 2026 results show growth and record profitability

Zscaler delivered strong third-quarter fiscal 2026 results, highlighting both robust growth and record profitability. Revenue rose 25% year over year to $850.5 million, while annual recurring revenue (ARR) increased 25% to $3.525 billion, or 21% excluding the impact of the Red Canary acquisition. 

The company achieved a record non-GAAP operating margin of 23%, and non-GAAP earnings per share climbed to $1.08 from $0.84 a year earlier. 

Free cash flow grew 14% year over year to $136.0 million, while deferred revenue increased 25% to $2.477 billion, reflecting continued customer demand and business momentum.

"Our differentiated Zero Trust SASE architecture, which hides applications from attackers and eliminates lateral movement, has never been more essential in securing against threats exposed by frontier models and compromised AI agents," Chaudhry said in the earnings release.

For a stock down over 40% year-to-date, the combination of record profitability, accelerating ARR, and a CEO articulating a precise technical thesis for why zero trust is the only viable architecture for agentic AI is the kind of disconnect that value-focused investors tend to notice.

Related: Cybersecurity stocks in spotlight as U.S. vulnerability takes center stage