Cybersecurity Stocks Have Run Sharply Amid Tech Rotation: Freedom Capital's Jay Woods Says This Stock Has Ample Room To Run

AI adoption and rising data-security needs are keeping investors focused on the cybersecurity trade.

• Cybersecurity leaders have surged this year as investors rotate within technology and seek exposure to AI-driven security demand.
• Zscaler remains a laggard despite signs of improving momentum and a potential technical breakout.
• Jay Woods sees a path toward $250-$265 if Zscaler’s breakout holds above key resistance and support levels.

Cybersecurity stocks have emerged as some of the strongest performers of 2026 as investors rotate within technology and growing AI adoption raises concerns about regulation and data security. 

Freedom Capital’s chief market strategist, Jay Woods, sees further upside in one laggard: Zscaler.

CrowdStrike, Fortinet, Okta and Palo Alto Networks have all more than doubled this year. According to Woods, the sector’s strength has increasingly spread beyond its market leaders, creating opportunities among cybersecurity stocks that have yet to participate fully in the rally.

AI Buildout Supports Cybersecurity Demand

Woods argues that the AI buildout is strengthening the long-term case for cybersecurity. As companies deploy more AI systems and data centers and regulators push for greater oversight, the need to protect data, networks and digital infrastructure becomes increasingly important.

That could support demand for cybersecurity products even if tighter regulation eventually slows parts of the broader technology buildout. Woods said the sector’s gains have also begun to lift some of its laggards as investors rotate toward stocks that have not yet fully participated in the rally.

Zscaler Starts To Turn Around

Zscaler has lagged its peers. The stock remains down about 13% in 2026 after falling as much as 65% from its 52-week high, according to Woods. But he believes the stock is now showing signs of a significant turnaround.

Woods points to Zscaler’s improving relative strength within the cybersecurity group and a technical setup that suggests its prolonged decline could be ending.

On the daily chart, a bottoming formation is accompanied by positive RSI momentum and a bullish MACD crossover as shares break above major resistance around $195. 

RSI (Relative Strength Index) measures whether a stock is becoming overbought or oversold, while MACD (Moving Average Convergence Divergence) helps identify potential changes in a stock’s trend.

Technical Setup Points To More Upside

Zscaler’s five-year weekly chart also supports the thesis, Woods said, showing a double-bottom formation and a break of the primary downtrend. He identifies the $165 area, where the rising 50-day and 200-day moving averages converge, as an important support level.

If the breakout holds, Woods sees potential upside toward $250-$265, representing roughly 25% to 30% from recent levels. A move back to $225, which would bring the stock to breakeven for 2026, would also represent substantial upside.

Retail Sentiment For Cybersecurity Stocks 

On Stocktwits, the retail sentiment was ‘bullish’ for ZS and PANW, and ‘neutral’ for CRWD and OKTA.

“$ZS Key Details of the Upgrade Reasoning: Bernstein analyst Peter Weed called Zscaler the "cheapest" cybersecurity vendor relative to its peers, pointing to an overly washed-out valuation despite sticky customer retention,” said a trader.

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