Zscaler (ZS) should benefit from growing AI security demand, stronger new-customer sales, more sales to existing clients and wider partner reach, Oppenheimer said in a Tuesday note.

Zscaler's expanding AI security products could create more growth opportunities as companies look to protect AI systems and automated agents, creating a large opportunity to sell more products to existing customers, as clients currently use an average of nine of Zscaler's more than 30 products and over 40% have yet to buy beyond one product-category, the investment firm said.

Oppenheimer said Zscaler's stronger focus on winning new customers, including more dedicated sales staff, revised incentives and greater use of partners, should help expand its customer base, pushing the company to over $8 billion in ARR by fiscal 2031, with about $2 billion of additional upside possible if AI-related demand grows faster than expected.

Zscaler's fiscal 2031 targets for operating margins of 27% to 30% and free cash flow margins of 29% to 32% provide a clearer path for long-term growth and profitability, according to the note.

Oppenheimer said continued execution could support a higher valuation for Zscaler shares and maintained its outperform rating with a $250 price target.