A Look at Zoom (ZM) Valuation Following Robust Earnings, Upgraded Guidance, and AI Growth Initiatives

Zoom Communications (ZM) delivered a strong quarterly update, reporting higher revenue and net income compared to last year. The company also raised its outlook for fiscal 2026, citing momentum from AI initiatives and share buybacks.

See our latest analysis for Zoom Communications.

Zoom’s upbeat earnings and improved guidance have quickly shifted investor sentiment, sending its share price higher in the short term. While last year’s total shareholder return was 2.2%, momentum is picking up following a bumpy few years and a hefty buyback program. Tech optimism and fresh product releases are also reworking the narrative around long-term growth.

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With a sizeable discount to analysts' price targets and new records in profitability, is Zoom still undervalued, or is the recent surge already reflecting expectations for future growth and innovation?

Most Popular Narrative: 10.2% Undervalued

With Zoom closing at $84.96 and the narrative's fair value at $94.58 per share, valuation watchers have reason to look twice. The most popular narrative blends recent earnings momentum with future investment potential, drawing attention to key trends driving the business forward.

Strong and accelerating adoption of AI-powered features such as AI Companion, Virtual Agent 2.0, and Contact Center Elite demonstrates growing customer reliance on advanced collaboration and productivity tools. This positions Zoom at the forefront of enterprise digital transformation. This is likely to expand the addressable market, drive multi-year revenue growth, and increase recurring revenue stability.

Read the complete narrative.

What’s fueling this bold price estimate? The real story lies beneath the headline—surprising assumptions about revenue momentum, sticky margins, and a profit outlook that sets Zoom apart from its industry peers. Want to see what really powers this forecast and why it’s sparking debate? Only the full narrative reveals the pivotal numbers behind the projected valuation.

Result: Fair Value of $94.58 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent competition from tech giants and uncertainty around monetizing new AI features could challenge Zoom’s path to sustained and above-market growth.

Find out about the key risks to this Zoom Communications narrative.

Build Your Own Zoom Communications Narrative

If you have a different perspective or want to dive deeper into the numbers yourself, you can quickly craft your own narrative in just a few minutes. Do it your way

A great starting point for your Zoom Communications research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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