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Market Data Table

Breakfast News: Here's What Sent Zscaler Down 20%

May 27, 2026

Tuesday's Markets
S&P 500 7,519 (+0.61%)
Nasdaq 26,656 (+1.19%)
Dow 50,462 (-0.23%)
Bitcoin $76,047 (-1.74%)

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Chart showing Zscaler's free cash flow over the past three years.

1) Zscaler Tumbles 20% as Guidance Disappoints

Zscaler (NASDAQ:ZS) fell over 20% ahead of the market open after results indicated a slower pace of growth going forward. Weak revenue guidance for the coming quarter -- partly due to lower demand in Europe -- and cuts to the full-year free-cash-flow margin contributed to the fall.

"Zscaler is the cybersecurity platform for the AI era. This is evident in our results and the reason we are so confident in our long term potential": CEO Jagtar Singh Chaudhry struck an upbeat tone, choosing to focus on the record non-GAAP profitability and strong recurring revenue as the company (lagging the S&P 500 by 76% since the Stock Advisor recommendation by Team Hidden Gems four years ago) continues to tap into artificial intelligence (AI) capabilities.
"It's clearly a top dog in an important emerging industry": Fool contributing analyst Toby Bordelon outlined the investment case for Zscaler back in March, saying it "enjoys a host of sustainable competitive advantages. Switching costs are significant for enterprise customers. The massive amount of data Zscaler receives as it processes traffic creates another advantage."

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2) Nvidia Ramps up Taiwan Spend

Nvidia (NASDAQ:NVDA) CEO Jensen Huang confirmed the company will increase spending in Taiwan from $100 billion to $150 billion a year going forward, as he believes "Taiwan is the epicenter of the AI revolution."

"Four years ago, five years ago, Nvidia was spending about $10 [billion], $15 billion a year in Taiwan": The scale of increase in investment in the country has been significant, mostly due to the strong ecosystem it has regarding manufacturing semiconductors that Nvidia -- and other big tech companies -- use.
Pace of investment growth unlikely to slow for Nvidia: Huang's comments come as Nvidia is building a new office in Taipei that can house 4,000 engineers, with further projects in the works.

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3) Amazon and Starlink Eye E.U. Orbit Bid

Reuters reports that Amazon (NASDAQ:AMZN) and Starlink will be able to bid for and potentially acquire some European mobile satellite spectrum next year in a move enabling further expansion in the sector for the respective companies.

European licenses a key piece of the puzzle: The satellite spectrum allows mobile devices and vehicles to communicate clearly even in remote locations, making access to it important for sector operators that want global scale.
Two-thirds of the spectrum is anticipated to be held for European companies: Despite the potential for Amazon and Starlink, the vast majority of licenses are likely to be granted to European peers.

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4) Don't Forget About Earnings From UHAL, HEI, and NTNX

As mentioned in yesterday's Breakfast News, today sees key earnings from Salesforce (NYSE:CRM), Snowflake (NYSE:SNOW), Synopsys (NASDAQ:SNPS), and Braze (NASDAQ:BRZE). A little more under the radar are the following companies, due to report after the closing bell.

U-Haul (NYSE:UHAL) will be aiming to post a better set of results following the 94% drop in profit last quarter. Higher expenses triggered the fall, with management expecting the elevated costs to bottom out later this year for the Stock Advisor rec by Team Rule Breakers.
HEICO (NYSE:HEI) is forecast to show double-digit year-over-year (YOY) gains in both revenue and earnings, as the Flight Support Group continues to benefit from higher demand, as noted last quarter. The company is recommended in Stock Advisor by Team Hidden Gems.
Nutanix (NASDAQ:NTNX) is expected to deliver a 5.1% YOY revenue increase, building on the strong recurring revenue from last quarter, although concerns about supply chain bottlenecks that caused management to lower full-year guidance remain for the Rule Breakers rec.

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5) Your Take

What's one stock, sector, or trend you're watching more closely heading into next month?

Debate with friends and family, or become a member to hear what your fellow Fools are saying!

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