Bull of the Day: Zoom Communications (ZM)

Zoom Communications (ZM) is a Zacks Rank #1 (Strong Buy) that provides cloud-based video conferencing. Its flagship product is the Zoom Meetings platform, which lets people connect through video, audio, chat, and screen sharing on desktops, mobile devices, and conference room systems.

The stock was a high flyer during COVID as people utilized Zoom’s platform when they could not go into the office. But as the pandemic came to an end, the stock headed lower.

After trading sideways for the last three years, the stock is approaching 2025 highs and looking to start a new bullish trend.

About the Company

Beyond meetings, Zoom offers a range of products that extend its platform into broader business communications.

Zoom Phone is a cloud-based business phone system designed to replace traditional office lines, while Zoom Rooms powers conference rooms and hybrid workspaces with easy-to-use software.

For larger audiences, Zoom Webinars and Zoom Events provide tools to host virtual events, town halls, and training.

The company has also integrated artificial intelligence through its AI Companion, which assists with meeting summaries, note-taking, and conversation insights.

In short, Zoom has evolved into a unified communications platform for businesses, schools, and individuals, best known for video calls but now expanding into a wider suite of enterprise solutions.

ZM is valued at $25 billion and has a Forward PE of 14. The stock has Zacks Style Scores of “C” in Growth, but “D” in Value and Momentum.

Q2 Earnings Beat

Zoom delivered a strong Q2, with earnings of $1.53 per share beating estimates of $1.37 and revenue of $1.22 billion topping expectations of $1.20 billion. The company raised its full-year outlook, now guiding FY26 EPS to $5.81–$5.84 versus $5.58 expected and revenue to $4.83–$4.84 billion versus $4.80 billion expected.

Free cash flow surged to $508 million from $449 million a year ago, while non-GAAP operating margin expanded to 41.3% from 39.2%. Large enterprise adoption remains a driver, with customers contributing over $100k in trailing revenue rising nearly 9% year over year to 4,274.

CEO Eric Yuan highlighted AI as a key growth catalyst, noting Zoom’s AI Companion has quadrupled its monthly active users and is increasingly integrated across the platform.

New wins included a major U.S. tech company deploying custom AI for 60,000 employees, HubSpot expanding to Zoom Workplace through AWS, and several large enterprise deals displacing legacy competitors.

With broad-based strength and accelerating AI adoption, Zoom enters the last quarter of the year with momentum.

Estimates Head Higher

Since reporting earnings, analysts have been raising estimates across all time frames.

For the current quarter, estimates have gone from $1.38 to $1.42 over the last 60 days. For next quarter, we see a similar movement, going from $1.40 to $1.44.

For the current year, estimates have gone from $5.59 to $5.81, a jump of 4%.

The longer-term trends look good, with estimates for next year going from $5.63 to $5.88, an increase of 4.5%.

Zoom Communications, Inc. Price and Consensus

Zoom Communications, Inc. price-consensus-chart | Zoom Communications, Inc. Quote

Many analysts lifted price targets with estimates. Stifel reiterated their Neutral rating, but lifted their target to $90 from $80. Benchmark reiterated their Buy rating and raised their target to $110 from $102.

Zoomtopia

Zoom recently held its 2025 Zoomtopia event, in which the company unveiled AI Companion 3.0. The upgraded AI system goes beyond being a simple assistant, acting instead as an intelligent, proactive layer across the entire Zoom platform and compatible third-party apps.

AI Companion 3.0 leverages agentic AI to transform conversations into action, synthesizing insights from internal knowledge like meeting transcripts and shared documents with external sources such as market research and industry data. New features include advanced note-taking that works across Zoom and rival platforms like Microsoft Teams and Google Meet, proactive skills to free up user time, personalized task management, and dynamic work surfaces that unify scattered information into actionable intelligence.

Zoom’s strategy is to build a unified workplace platform where AI seamlessly streamlines collaboration, reduces administrative burdens, and helps users deliver higher-quality results faster.

The Technical Take

Since last October, the stock has made some attempts to push into the $100 area, but failed. Now in the mid-80s after a trip to $70, the bulls have control once again.

The February highs were $89, so if the stock breaks $90, there could be some short covering and new buyers. There is a Fibonacci extension target at $104 so the bulls looking for a breakout could be looking at a nice winner buying that $90 level.

For those looking to start a position before a breakout, some support levels are listed below:

21-day: $83.90

50-day: $78.30

200-day: $78.80

That 50-day is looking to rise above the 200-day MA soon, something that hasn’t happened for the stock since June. This could signal some “Golden Cross” buying that would help a possible break above that $90 level.

In Summary

Zoom has rebuilt momentum with stronger fundamentals, rising estimates, and fresh AI-driven innovation. The company is no longer just a pandemic-era video call solution; it is evolving into a full-scale communications platform with enterprise adoption and next-generation AI at its core.

With improving technicals, raised guidance, and a Zacks Rank #1 (Strong Buy), Zoom looks positioned to break out of its multi-year consolidation and reward investors who step in ahead of the next leg higher.

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This article originally published on Zacks Investment Research (zacks.com).

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