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 size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Zoom Video. We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends.
And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. For the current fiscal year, the consensus earnings estimate of $5.31 points to a change of +1.9% from the prior year. The consensus earnings estimate of $5.31 for the current fiscal year indicates a year-over-year change of +1.9%.
- For Zoom Video, the consensus sales estimate for the current quarter of $1.16 billion indicates a year-over-year change of +2.3%.
- 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.
- Zoom Communications (ZM) is experiencing mixed market reactions ahead of its earnings release.
- That higher-value cohort grew by 18% year over year to 3,672 customers in its latest quarter.
- Zoom launched its artificial intelligence (AI)-powered assistant Zoom AI companion in 2023, and a new AI-powered collaboration platform called Zoom Workplace in 2024.
- Zoom Video Communications (ZM) has recently been on Zacks.com’s list of the most searched stocks.
If you have received this message in error, please contact our support team at Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Looking ahead, Zoom’s strategic initiatives revolve around becoming an AI-first company, with a focus on its AI Companion tool, which is driving increased productivity for customers. If you want to buy Zoom stock, you can easily add shares to your portfolio.
Valuation Measures
Zoom Video reported revenues of $1.16 billion in the last reported quarter, representing a year-over-year change of +2.1%. While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues.
How to buy Zoom Video Communications stock
Zoom Communications Inc. provides an Artificial Intelligence-first work platform for human connection in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. Further, it provides Workvivo, an all-in-one employee experience platform; Zoom Rooms, a software-based conference room system; Workspace Reservation; Zoom Developer Platform; App Marketplace which integrates platform with other applications, platforms, websites, and services; and Zoom Apps. It serves individuals; and education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries. The company was formerly known as Zoom Video Communications, Inc. and changed its name to Zoom Communications, Inc. in November 2024. The company was incorporated in 2011 and is headquartered in San Jose, California.
In the quarter, 4,192 customers contributed more than $100,000 in trailing-12-month revenue, up 8% from the same quarter last fiscal year. New AI products include Zoom Virtual Agent, Zoom Revenue Accelerator, and Zoom AI Companion. Zoom Virtual Agent is a self-service chatbot that can handle a wide range of issues, including complex customer problems, and an AI virtual voice agent that enables self-service voice calls. The Zoom Revenue Accelerator uses machine learning algorithms to support better customer interactions, communication, and improve the performance of sales teams.
About Zoom Communications, Inc.
If you want to know the ins and outs of how to invest in Zoom stock, whether or not it’s currently profitable, and how the business is doing, keep on reading. The first version of Zoom Meetings allowed up to 25 participants per conference. By the end of Zoom’s first month in business, it already had close to half a million users; a few months later, that figure was up to 1 million users.
Salesforce
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.
For Zoom Video, the consensus sales estimate for the current quarter of $1.16 billion indicates a year-over-year change of +2.3%. For the current and next fiscal years, $4.64 billion and $4.76 billion estimates indicate +2.4% and +2.7% changes, respectively. The company beat consensus EPS estimates in each of the trailing four quarters.
The company topped consensus revenue estimates each time over this period. Whether or not you should invest in Zoom stock is ultimately a personal decision, but there are some factors you should weigh when deciding whether or not the company makes sense for your portfolio. 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. To restore that balance, Zoom is focusing on gaining larger enterprise customers that generate at least $100,000 in trailing 12-month revenues. That higher-value cohort grew by 18% year over year to 3,672 customers in its latest quarter.
For the next fiscal year, the consensus earnings estimate of $5.23 indicates a change of -1.5% from what Zoom Video is expected to report a year ago. No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price rightly reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance. Those new features include Zoom Scheduler, which schedules meetings with people outside an organization; Intelligent Director, which uses AI and multiple cameras to capture the clearest images and angles; and its Zoom Virtual Agent chatbot for customer support.
By September 2013, Zoom raised a Series B round of funding to the tune of $6.5 million and had 3 million daily participants using its meeting software. Compared to the Zacks Consensus Estimate of $1.15 billion, the reported revenues represent a surprise of +1.22%. While media releases or rumors about a substantial change in a company’s business prospects usually make its stock ‘trending’ and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making. As long as you’re not expecting pandemic-era returns and want to invest in Zoom stock for its more mature business potential, there’s a lot for investors to like about this stock. The pandemic also marked Zoom’s first foray into selling hardware products, with offerings like Zoom Rooms and Zoom Phone becoming available to customers who could pay a monthly subscription for hardware and accompanying services. Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else.
Zoom Video Communications
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.
- It serves individuals; and education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries.
- When Cisco rejected that idea, Yuan left and founded Zoom in 2011.
- Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else.
- But that growth was a double-edged sword, since many of those people were free users who didn’t generate any revenue.
- 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.
- In the quarter, 4,192 customers contributed more than $100,000 in trailing-12-month revenue, up 8% from the same quarter last fiscal year.
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.
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 How to invest in a bear market -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.
That’s because we believe the present value of its future stream of earnings is what determines the fair value for its stock. Zoom might not seem like an obvious play on the artificial intelligence (AI) market, but its management still mentioned “AI” more than 40 times during its latest conference call. Zoom recently hired Dr. XD Huang, the former chief technology officer for Microsoft’s Azure AI platform, as its new chief technology officer.
Zoom Video Communications (ZM) has recently been on Zacks.com’s list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock’s performance in the near future. As with any stocks you’re considering for your portfolio, make sure you understand the business you’re buying and whether it fits into the basket of stocks you’re building before you commit your hard-earned capital. Zoom launched its artificial intelligence (AI)-powered assistant Zoom AI companion in 2023, and a new AI-powered collaboration platform called Zoom Workplace in 2024. Zoom has been faced with headwinds as growth has normalized in recent years from pandemic heights, and it’s had to slash its workforce. In 2017, Zoom hit a $1 billion valuation after raising $100 million in Series D funding from Sequoia Capital.
