Copyright © 2025 FactSet Research Systems Inc.Copyright © 2025, American Bankers Association. SEC fillings and other documents provided by Quartr.© 2025 TradingView, Inc. Zoom Communications (ZM) is experiencing mixed market reactions ahead of its earnings release. Analysts project an EPS of $1.43, reflecting a 3.62% increase from last year, while concerns about growth and competition linger.
Yuan said Huang was joining Zoom at an “optimal moment” as it rolled out new AI tools across its platform. Zoom Video is graded C on this front, indicating that it is trading at par with its peers. Click here to see the values of some of the valuation metrics that have driven this grade. Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company’s earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
The company was founded by Eric S. Yuan in 2011 and is headquartered in San Jose, CA. While Zoom has fallen out of favor with some investors, the business fundamentals still look good, the company is profitable, and it’s leaning into the potential of AI for its business. That could create a valuable buying proposition for investors looking for a potentially undervalued stock that was once a pandemic favorite, but has plenty of growth opportunity left to explore outside of that time frame. It’s encouraging to see Zoom grow faster than Webex as it locks in larger customers, expands its gross margins, and rolls out new AI features. But on their own, these three factors don’t make Zoom a more compelling investment yet — since it still faces a difficult uphill battle before it can evolve into a more diversified cloud-based communications company.
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The Motley Fool has positions in and recommends Cisco Systems, Microsoft, and Zoom Video Communications. Zoom’s gross margin rose from 69% in fiscal 2021 to 75% in fiscal 2023 and then expanded again to 76% in the first half of fiscal 2024. The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Zoom Video. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term. For privacy and data protection related complaints please contact us at Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.
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It also hosted its first annual user conference (Zoomtopia) in 2017 and launched its telehealth platform. In these years, the company rapidly integrated its solutions with those of existing companies that included Salesforce (CRM -5.31%), Slack (now owned by Salesforce), Microsoft (MSFT -1.98%), Meta Platforms (META -2.67%), and Alphabet (GOOGL +0.15%)(GOOG +0.21%). Early on in its business journey, the company raised $3 million in seed money from venture capitalists and various company leaders, including the founder of WebEx.
Here’s Why Zoom Communications (ZM) is a Strong Growth Stock
Zoom’s founder and CEO Eric Yuan previously worked at Webex, a video conferencing start-up acquired by Cisco in 2007. Yuan joined Cisco as a vice Forex ema president of engineering and pitched an idea of developing a simplified video conferencing app for mobile devices. When Cisco rejected that idea, Yuan left and founded Zoom in 2011.
Analyst Price Targets
Zoom was the fifth-most-downloaded app in 2020 and experienced 30x growth in daily meeting participants between December 2019 and April 2020. Zoom Video is expected to post earnings of $1.30 per share for the current quarter, representing a year-over-year change of +0.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%. At the peak of the pandemic in April 2020, Zoom hosted over 300 million daily meeting participants, who used the platform to attend online classes, work remotely, and stay in touch with their friends and family members. But that growth was a double-edged sword, since many of those people were free users who didn’t generate any revenue. Its free meetings are capped at 40 minutes per session with a maximum capacity of 100 attendees, while its paid tiers provider longer time limits, room for more attendees, and other cloud-based services.
- That’s because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
- But on their own, these three factors don’t make Zoom a more compelling investment yet — since it still faces a difficult uphill battle before it can evolve into a more diversified cloud-based communications company.
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- Zoom isn’t experiencing the level of growth it was in the early days of the pandemic, but it wasn’t reasonable to expect that streak to continue indefinitely, either.
Yuan’s departure came back to haunt Cisco, as Zoom’s catchy brand and simple interface made it an appealing alternative to complicated enterprise-oriented platforms during the pandemic. Cisco scrambled to catch up to Zoom by updating Webex, but it failed to gain much traction before the entire video conferencing market suffered a post-pandemic slowdown. That’s why Zoom now trades at about $68 with an enterprise value of $14 billion, or just three times the $4.5 billion in revenue it’s expected to generate in fiscal 2024. But it only expects its revenue to rise 2% this year as its adjusted earnings grow 6% to 7% — so it certainly seems like its hypergrowth days are over. Over the last 30 days, the Zacks Consensus Estimate remained unchanged. In the first quarter of fiscal year 2026, Zoom’s total revenue was $1.2 billion, a year-over-year increase of about 3%.
Many investors are already familiar with that boom-and-bust story, so today I’ll focus on three other aspects of Zoom’s business that also deserve their attention. Your investment style can dictate which kind of fund is best for your portfolio. Meanwhile, the Zoom AI Companion does everything from providing meeting summaries and action items from in-person meetings to recommending what days employees should work from the office to what meeting rooms they should use based on workforce scheduling. Select to analyze similar companies using key performance metrics; select up to 4 stocks. Zoom Video Communications (ZM) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock’s performance in the near term.
Zoom Video Communications A Past Events
In the case of Zoom Video, the consensus sales estimate of $1.16 billion for the current quarter points to a year-over-year change of +2.3%. The $4.64 billion and $4.76 billion estimates for the current and next fiscal years indicate changes of +2.4% and +2.7%, respectively. Zoom Video Communications, Inc. engages in the provision of video-first communications platform. It connects people through frictionless video, voice, chat and content sharing, and enable face-to-face video experiences for thousands of people in a single meeting across disparate devices and locations. It focuses on customer and employee happiness, a video-first cloud architecture, recognized market leadership, viral demand, an efficient go-to-market strategy, and robust customer support.
Historical Prices for Zoom Video Communications
If you don’t want to buy whole shares of Zoom, you may decide to invest in the stock through an exchange-traded fund (ETF). Doing so will also give you the opportunity to invest in a wide range of other stocks contained in that fund, an instant way to diversify your portfolio with a single investment. Several ETFs that feature Zoom as a holding include Fidelity Cloud Computing ETF (FCLD -0.74%), Invesco ESG NASDAQ Next Gen 100 ETF (QQJG -1.28%), and Fidelity Value Factor ETF (FVAL -1.14%). While there were plenty of early investors in Zoom, many first started paying attention when witnessing its explosive streak of growth with the onset of the COVID-19 pandemic.
- Zoom recently hired Dr. XD Huang, the former chief technology officer for Microsoft’s Azure AI platform, as its new chief technology officer.
- So, you might want to look at some of the facts that could shape the stock’s performance in the near term.
- With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more conclusive indicator of a stock’s near-term price performance, as it effectively harnesses the power of earnings estimate revisions.
- The company topped consensus revenue estimates each time over this period.
- Select to analyze similar companies using key performance metrics; select up to 4 stocks.
Those new AI features could lock in its customers and widen its moat against Microsoft Teams, Webex, and other potential competitors across the crowded video conferencing market. At its peak, Zoom’s enterprise value reached $160 billion — or 60 times the revenue it would generate in fiscal 2021. That nosebleed valuation became unsustainable as its growth cooled off in a post-pandemic world, more competitors entered the market, and rising interest rates ushered investors toward more conservative investments.