Zoom Communications, Inc. ZM shares have gained 7.6% in the trailing three months, outperforming the Zacks Computer and Technology sector and the S&P 500 index’s return of 4.8% and 0.9%, respectively. The stock has also outperformed the Zacks Internet – Software industry’s growth of 1.1% in the same time frame.
The outperformance can be attributed to the company’s accelerating AI-driven innovation, which is reshaping productivity workflows across enterprises. From the rapid adoption of Zoom AI Companion to multi-product deals with Global 2000 firms, Zoom’s platform expansion and improved churn rates have reaffirmed investor confidence in its near-term growth trajectory.
The share price rise does not tell the whole story. Let’s delve deeper into two factors driving ZM’s growth to understand why the stock is a buy now.
Zoom Leverages AI to Stay Ahead of the Competition
Zoom faces competition from legacy platforms like Cisco Systems’ CSCO Webex and bundled productivity suites, such as Microsoft’s MSFT Teams and Alphabet’s GOOGL Google Workspace. While Cisco Systems’ Webex and Microsoft Teams offer video meetings, messaging and file sharing, Alphabet’s Google Workspace integrates Meet with email, calendar, chat, and collaboration tools in a unified platform.
Zoom Communications, Inc. Price and Consensus
Zoom Communications, Inc. price-consensus-chart | Zoom Communications, Inc. Quote
To differentiate itself, Zoom is doubling down on AI innovation to enhance productivity and customer value. One of its key growth drivers in the fiscal first quarter was its expanding portfolio of AI-powered tools. Adoption of Zoom AI Companion grew nearly 40% quarter over quarter, with usage expanding beyond meeting summaries to include answering questions, scheduling, content creation and more. Raymond James, a U.S.-based financial services firm, recently announced that it is rolling out AI Companion meeting summaries firm-wide, highlighting the product’s enterprise utility.
Zoom also began monetizing its AI offerings through Custom AI Companion, launched in the fiscal first quarter. Early feedback from Global 2000 trial customers has been positive, with particular interest in features like “Bring Your Own Dictionary,” meeting summary templates, and Jira integration.
Zoom Expands Platform Adoption Across Large Enterprises
Zoom’s enterprise segment showed solid momentum in the fiscal first quarter, with enterprise revenues growing approximately 6% year over year and accounting for 60% of total revenues, up two percentage points from the prior year. The number of customers contributing more than $100,000 in trailing 12-month revenues rose 8% year over year, representing 32% of total revenues in the fiscal first quarter.
New wins underscore this momentum. The Boston Celtics upgraded to Zoom Workplace Enterprise Plus and adopted Zoom Phone and Workvivo. A leading financial institution signed a deal exceeding $1 million in ARR, consolidating its tech stack by replacing Microsoft Teams and other tools with Zoom’s AI-first platform.
Zoom Provides Positive Fiscal Q2 Guidance
For the second quarter of fiscal 2026, Zoom expects total revenues between $1.195 billion and $1.2 billion. Revenues in constant currency are expected to be between $1.196 billion and $1.201 billion. Non-GAAP diluted earnings per share are anticipated to be between $1.36 and $1.37.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $1.2 billion, indicating year-over-year growth of 2.96%. The consensus mark for earnings is pegged at $1.37 per share, suggesting a year-over-year decline of 1.44%.
ZM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with the average surprise being 9.46%.
What Should Investors Do With ZM Stock?
Zoom has strengthened itself in a competitive market as an AI-first platform. Additionally, its solid momentum across the enterprise segment in the first quarter of fiscal 2026, driven by continuous platform expansion, signals strong upside potential.
ZM currently carries a Zacks Rank #2 (Buy), suggesting a compelling entry point in the stock for investors now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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