The AI revolution isn’t just reshaping industries—it’s redefining them. Two fast-growing players at the intersection of data intelligence and digital infrastructure are leading this transformation: Zeta Global (NYSE: ZETA) and SentinelOne (NYSE: S).
Zeta Global is quietly becoming the backbone of AI-powered marketing, using one of the world’s largest proprietary data clouds to help brands predict and personalize customer behavior with uncanny accuracy. With 16 straight quarters of “beat and raise” performance and a bold new acquisition in motion, Zeta is proving that profitable AI scale isn’t limited to Big Tech.
Meanwhile, SentinelOne has crossed a major milestone—$1 billion in Annual Recurring Revenue—and turned the corner to operating profitability. Its autonomous, AI-driven cybersecurity platform is revolutionizing enterprise defense, making it one of the few next-gen security firms combining innovation with sustainable margin growth.
Together, Zeta and SentinelOne showcase how AI isn’t just powering the future—it’s already paying dividends.
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Zeta Global (NYSE: ZETA) is a leading force in the Artificial Intelligence (AI)-powered marketing and advertising technology (AdTech) sector. The company provides a comprehensive, cloud-based platform—the Zeta Marketing Platform (ZMP)—that enables enterprises to acquire, grow, and retain customers through highly personalized, omnichannel campaigns. Its primary competitive advantage lies in its massive proprietary consumer data cloud, which fuels its generative AI capabilities and allows brands to deliver superior marketing ROI.
Business Model and Revenue Streams 📦
Zeta's business model is centered on transforming marketing from an uncertain expense into a predictable, data-driven engine for growth. Unlike many competitors that rely on third-party data, Zeta owns one of the world's largest proprietary data clouds, containing behavioral signals from over 240 million consumers in the U.S. and 535 million globally.
The company's revenue primarily comes from its AI-Powered Marketing Cloud through two main streams:
Direct Platform Revenue: This is the largest and fastest-growing segment, where clients pay for access to and consumption of the ZMP and its underlying data and AI services. This shift to direct platform usage, which accounted for approximately of total revenue in Q1 2025, is strategic, as it offers higher gross margins and builds stronger, long-term customer relationships.
Agency Business Revenue: Revenue is also generated from services provided through agency partners, which increasingly use the ZMP as their preferred data and activation layer. Zeta focuses on attracting "Scaled Customers" (> annual spend) and "Super-Scaled Customers" (> million annual spend), which drive roughly of total revenue and demonstrate high retention rates.
Macroeconomic Impact
Zeta operates in the digital marketing space, which is sensitive to overall corporate marketing budgets. When macroeconomic uncertainties rise, companies often pull back on ad spending. However, Zeta's AI-driven approach offers a hedge: its technology helps marketers optimize spending and prove ROI, making it an essential tool during cautious economic cycles. The company publishes its proprietary Zeta Economic Index (ZEI), which uses its data cloud to track consumer behavior in real-time, often finding that while consumer sentiment dips, actual spending activity remains resilient, allowing its clients to target marketing dollars more effectively.
Recent Performance and Corporate Developments 📈
Zeta Global has delivered a remarkable track record of outperformance, consistently reporting quarterly results that exceed expectations.
Q2 2025 Financial Highlights: 💰
The company reported its 16th consecutive "Beat and Raise" quarter for Q2 2025 (reported August 5, 2025), showcasing robust growth momentum:
- Total Revenue: million, marking a strong year-over-year () increase and significantly beating analyst consensus.
- Adjusted EBITDA: million, up , demonstrating substantial operating leverage.
- Gross Margin: Maintained a robust gross margin of over , reflecting the efficiency and value of its direct platform offerings.
- Customer Metrics: The average revenue per user (ARPU) for Super-Scaled Customers continues to see double-digit growth, driven by clients adopting multiple ZMP use cases.
Strategic Initiatives and Mergers: 🤝
Zeta has been highly active in the M&A and innovation space, particularly in recent weeks:
- Acquisition: In late September/early October 2025, Zeta announced its intent to acquire Marigold's Enterprise Business for approximately million. This strategic move is expected to expand Zeta's enterprise client base and accelerate its "One Zeta" strategy of cross-selling a unified platform solution.
- AI Innovation: The company continues to lead with AI, launching its AI Agent Studio and, most recently, unveiling Athena by Zeta$^{\text{TM}}$—a conversational, superintelligent agent that translates marketer questions into actionable campaign outcomes. This focus on generative AI is key to driving higher consumption revenue (over growth in consumption revenue was attributed to AI adoption in ).
Path to Profitability and Fair Value 🎯
Zeta is already highly profitable on an Adjusted EBITDA basis. However, the company is still investing heavily in R&D and sales to capture market share, resulting in a net loss on a GAAP basis (net loss of approximately million LTM as of Q2 2025).
The path to sustained GAAP profitability is clear and centered on:
- Operating Leverage: Maintaining high revenue growth (targeting ) while keeping operational cost growth lower, leading to improved Adjusted EBITDA margins (target by ).
- Platform Penetration: Accelerating the "One Zeta" strategy to move more clients onto the high-margin Direct Platform and expanding usage across multiple marketing use cases.
- Strategic Acquisitions: Integrating businesses like Marigold to immediately boost scale, customer count, and cross-selling potential.
In terms of Fair Value, multiple models suggest the stock is currently undervalued. A Discounted Cash Flow () analysis often places the company's intrinsic value significantly higher, with some estimates reaching per share, suggesting a potential discount of over from the current trading price (around ). The stock’s Price-to-Sales () ratio is also below the industry average, which is unusual for a high-growth AI software company.
Analyst Estimates and Ratings 📊
Zeta Global enjoys strong confidence from the Street, with multiple firms reiterating bullish calls in the last 30 days following the Q2 earnings beat and the Marigold acquisition announcement.
- Consensus Rating: The overall consensus rating is a "Strong Buy", based on a high concentration of Buy ratings and zero Sell ratings among major analysts.
- Recent Ratings: In early October , firms like D.A. Davidson, Craig-Hallum, and Truist Financial all maintained their Buy ratings, highlighting the company's momentum and execution.
- Price Target: The average 12-month price target is approximately to , indicating a substantial upside potential from the recent trading range.
Investor-Focused Takeaway: Is ZETA Right for Your Portfolio?
Zeta Global offers a unique way to invest in the AI wave by focusing on the application of AI to one of the largest enterprise spending categories: marketing. The company's recent performance is exceptional, marked by consistently beating and raising guidance, strong margin expansion, and a commitment to rewarding shareholders through a new stock buyback program.
What to Watch in the Near Term: 📈
- Marigold Integration: The successful integration of the Marigold business will be critical to capitalizing on cross-selling opportunities and margin enhancement.
- AI Monetization: Monitor the adoption rates and revenue contribution from its new Generative AI products (like Athena by Zeta$^{\text{TM}}$), as these high-value services will be key margin drivers.
- GAAP Profitability Timeline: Watch management commentary for any acceleration of the expected timeline for reaching sustained GAAP net income.
Recommendation:
Zeta Global (ZETA) presents a compelling investment case, combining the massive growth potential of its proprietary AI platform with proven execution and improving financial discipline. The strong analyst consensus and significant implied upside from current price targets suggest this stock is well-positioned for long-term growth as the enterprise world increasingly adopts AI for customer engagement.
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SentinelOne (NYSE:S)
SentinelOne (NYSE: S) is a pioneer in AI-powered cybersecurity, offering an autonomous platform, Singularity, that unifies security across endpoints, cloud workloads, and identity systems. Unlike traditional, reactive security solutions, SentinelOne uses a patented behavioral AI engine to detect threats, autonomously prevent attacks, and provide remediation in real-time. This focus on automation and AI is critical in defending against modern, sophisticated cyber threats.
Business Model and Revenue Streams 📦
SentinelOne operates a pure-play, subscription-based Software-as-a-Service () model, focusing on enterprise clients globally. The core of its business strategy is to consolidate multiple security products (like Endpoint Detection and Response, Cloud Security, and Data Lake) into its single Singularity Platform, which is sold under a subscription licensing model.
The majority of its revenue (over 90%) is Subscription Services Revenue derived from Annual Recurring Revenue (ARR) contracts. This high ARR model provides predictable, high-quality revenue streams. The company emphasizes selling expanded capabilities, evidenced by its strong growth in customers with ARR of $100,000 or more. Revenue is based on tiered pricing structures, typically per endpoint or workload protected.
Macroeconomic Impact
The cybersecurity market is often deemed non-discretionary, meaning companies must spend on security regardless of economic conditions. However, SentinelOne is not immune to macroeconomic pressure.
- Headwinds: The company has previously noted that macroeconomic uncertainties led to longer sales cycles and slower purchasing decisions from customers. This pressure primarily impacts the pace of new customer acquisition and, consequently, its Net New ARR growth rate.
- Tailwinds: The relentless rise in cyber threats, coupled with the explosion of Generative AI adoption (which introduces new attack surfaces), makes autonomous security solutions like SentinelOne's essential. This "must-have" status provides a strong defensive growth moat, allowing the company to continue investing aggressively in R&D and gaining market share against legacy competitors.
Recent Performance and Corporate Developments 📈
SentinelOne has successfully crossed the $1 billion ARR milestone, cementing its position as a major player in the AI-native security landscape.
Q2 Fiscal Year 2026 Financial Highlights: 💰
(Reported August 28, 2025; Fiscal Year 2026 refers to the period ending January 31, 2026)
- Total Revenue: $242.2 million, marking a 22% year-over-year (YoY) increase, meeting analyst expectations.
- Annualized Recurring Revenue (ARR): Increased 24% YoY to $1.0 billion, a major company milestone.
- Non-GAAP Operating Margin: The company achieved its first-ever positive Non-GAAP Operating Margin of 2%, a significant swing from a negative margin in the prior year, highlighting a focus on operational leverage.
- Customer Growth: Customers spending over $100,000 in ARR grew 23% YoY to 1,513.
Strategic Initiatives and Mergers: 🤝
SentinelOne has been aggressively bolstering its platform capabilities through acquisitions and product launches focused on unifying the security stack.
- Acquisition of Observo AI: In early September 2025, SentinelOne announced the acquisition of Observo AI. This strategic acquisition aims to revolutionize the SIEM (Security Information and Event Management) and Security Operations market by integrating an AI-native data pipeline. This move is crucial for securing the massive, siloed data volumes generated by modern enterprises, further enabling autonomous security operations.
- Product Innovation: The company continues to roll out AI-powered solutions like Purple AI and the new SentinelOne Flex licensing model, which encourages customers to adopt multiple platform capabilities beyond core endpoint security.
Path to Profitability and Fair Value 🎯
SentinelOne has made significant progress on its path to profitability, reaching Non-GAAP operating profitability in Q2 FY2026 and reaffirming its commitment to full-year operating profitability and positive free cash flow.
The key strategies driving profitability are:
- High Gross Margins: Maintaining exceptionally high Non-GAAP gross margins (currently around 79%) due to its scalable software model.
- Sales Efficiency: Focusing sales efforts on expanding wallet share among its high-value customers (>100,000 ARR) and demonstrating superior total cost of ownership (TCO) compared to legacy security platforms.
- Operating Leverage: The company is now effectively translating its top-line revenue growth into bottom-line margin expansion, with operating margin expected to reach 3% for the full FY2026.
In terms of Fair Value, analysts and valuation models generally consider the stock to be undervalued relative to its growth profile and long-term potential. A Discounted Cash Flow (DCF) analysis, based on consensus forecasts for its significant free cash flow growth (expected to reach over $200 million by FY2028), suggests an intrinsic value of approximately $22.77 to $24.78 per share. Compared to its current price (around $17), this implies an upside of over 20%.
Analyst Estimates and Ratings 📊
SentinelOne is viewed favorably by Wall Street, benefiting from its technology leadership and clear execution toward profitability.
- Consensus Rating: The consensus rating among analysts is a "Buy", with a high percentage of analysts rating the stock as "Strong Buy" in the last 30 days.
- Recent Ratings: Following the Q2 FY2026 earnings report, numerous firms, including major investment banks, reiterated their Buy ratings, highlighting the positive inflection point in non-GAAP operating margin.
- Price Target: The average 12-month price target is approximately $23.45, with the highest estimates reaching up to $30.00, reinforcing the belief that the stock has substantial room for appreciation.
Investor-Focused Takeaway: Is S Right for Your Portfolio?
SentinelOne (S) is transitioning from a high-growth, unprofitable startup to a high-growth, profitable cybersecurity platform. The company's recent results confirming positive non-GAAP operating income and its crossing of the $1 billion ARR threshold are significant de-risking events. The focus on AI and strategic acquisitions like Observo AI positions it well to capture market share in the rapidly expanding security data and SIEM segments.
What to Watch in the Near Term: 📈
- Gross Margin Consistency: Continue monitoring non-GAAP gross margins, which should remain high (near 79%) to support profitability goals.
- Observo Integration: Watch for updates on the integration of Observo AI and how quickly it contributes to new platform offerings and customer retention.
- Macro Headwinds: Pay attention to management commentary on new customer acquisition (new logo growth) as a barometer for the impact of broader macroeconomic spending caution.
Recommendation: SentinelOne (S) is highly recommended for investors seeking exposure to autonomous, AI-driven enterprise security with proven growth and a newly confirmed path to profitability. Despite short-term stock volatility, the company's competitive technology moat and expanding market reach make it a strong conviction Buy in the AI space.
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💡 Final Take: 2 Profitable Plays at the Heart of the AI Economy
The AI revolution is real—and Zeta Global (ZETA) and SentinelOne (S) are proving it’s not just hype. These are revenue-generating, margin-expanding, AI-native platforms disrupting massive industries with serious financial discipline.
📊 Zeta Global (ZETA) – The AI Marketing Cloud That’s Scaling Fast
✔ 16 consecutive "beat and raise" quarters
✔ Expanding platform reach through smart M&A (Marigold acquisition)
✔ Powering personalization with proprietary data from 500M+ consumers
➤ Best for: Long-term investors seeking high-margin AI exposure outside of Big Tech, in a proven enterprise platform with growing analyst conviction.
🛡 SentinelOne (S) – Autonomous Security Built for the AI Age
✔ $1B+ ARR milestone + positive operating margin
✔ High-margin SaaS model (79% gross margins)
✔ Observo AI acquisition adds massive runway in security data & SIEM
➤ Best for: Growth-oriented investors looking for a newly profitable, high-moat cybersecurity leader built on AI and automation.
Investor Insight:
💥 Want AI-powered enterprise growth with recurring revenue? → ZETA
🔐 Want AI cybersecurity with billion-dollar ARR and operating profits? → S
Both companies have turned the corner—from potential to performance. They're not just growing fast... they’re doing it with real profits.
We’ll be back with our next report soon, bringing you fresh insights on the market and new opportunities to watch. In the meantime, we’d love to hear from you—let us know how you found this report, what niche sectors you’d like us to cover next, and don’t forget to share your top stock holdings with us. Your feedback helps us deliver reports that matter most to your investing journey.
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