Zoom (ZM): Assessing Valuation After Earning a Spot in the 2025 Gartner Magic Quadrant

Zoom Communications (ZM) just landed a spot in the 2025 Gartner Magic Quadrant for Contact Center as a Service, just three years after rolling out its own contact center platform. That is a pretty significant milestone, especially considering how competitive this space has become and how much tech vendors rely on Gartner’s Quadrant for validation. For investors, this recognition is an encouraging signal that Zoom’s AI-driven strategy is gaining traction beyond just video calling. This is something the market has been keenly watching since the company’s early-pandemic highs.

This news seems to have given the stock some energy. Over the past month, shares gained 16%, and Zoom is now up 24% in the past year, suggesting some renewed optimism about its growth narrative. While momentum is positive, it is easy to see why some investors remain cautious after a rough few years, including a steep 5-year decline. Recent acknowledgment from Gartner, alongside steady revenue and net income growth, adds a new dimension to the longer-term recovery story and may nudge Zoom further into investor watchlists.

With investor sentiment picking up, this recognition could offer new opportunities for Zoom, though the market may already be factoring in expectations for future growth.

Most Popular Narrative: 8.3% Undervalued

The most widely followed valuation narrative sees Zoom Communications as currently undervalued, projecting notable upside based on its trajectory of recurring revenue and platform expansion.

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 and is likely to expand the addressable market, drive multi-year revenue growth, and increase recurring revenue stability.

Want to know the formula behind this undervaluation? The narrative factors in a future profit playbook that is typically reserved for proven tech giants. Curious which bold growth and margin assumptions could unlock this premium target? Dive deeper for the numbers and see what is driving this confident fair value call.

Result: Fair Value of $91.63 (UNDERVALUED)

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

However, intensifying competition from bigger platforms and potential demand saturation in core video conferencing could present challenges to Zoom’s optimistic growth trajectory.

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

Another View: SWS DCF Model Weighs In

While the market narrative leans on future growth and multiples, our DCF model suggests Zoom is trading below its intrinsic value based on projected cash flows. Do both paint the same story, or is the gap meaningful?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Zoom Communications for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Zoom Communications Narrative

If you are not convinced or want to dig deeper on your own, you can quickly build your own take on Zoom’s outlook in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Zoom Communications.

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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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