Should You Buy the Post-Earnings Pop in Zoom Stock?

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Should You Buy the Post-Earnings Pop in Zoom Stock?

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August 28, 2025

Zoom Communications (ZM) stock surged 12.7% after the company posted a fiscal second-quarter earnings beat and raised its full-year guidance on Aug. 21, fueling investor confidence. The strong quarter featured robust enterprise revenue growth, powered by the company’s expanding lineup of artificial intelligence (AI) driven tools.

CEO Eric Yuan emphasized that AI was reshaping how people collaborate, highlighting Zoom’s leadership in delivering innovations that enhance productivity, cut costs, and improve experiences for both employees and customers. His remarks echoed the company’s broader AI-first strategy, which includes the launch of Virtual Agent 2.0, the introduction of a Custom AI Companion, and the continued rollout of advanced agentic AI features across the platform.

The question for investors now is whether this momentum makes ZM stock an attractive buy.

Zoom is a communications technology company best known for its signature videoconferencing, collaboration, and unified communications tools, ranging from Zoom Meetings and Zoom Phone to Zoom Chat, Zoom Mail, and AI-powered features. Headquartered in San Jose, California, Zoom was founded in 2011 and went public in 2019.

Zoom’s market capitalization stands at $24.5 billion, reflecting its position among leading cloud-based collaboration platforms globally. With its AI-first strategy, Zoom continues to evolve from a video conferencing provider into a comprehensive, intelligent collaboration platform.

ZM stock has delivered a muted year-to-date (YTD) performance, down just 1% currently. Over the past 52 weeks, the share price has fluctuated but maintained an overall positive trajectory with returns of 14%.

Zoom’s recent rally, catalyzed by a strong Q2 report and raised guidance, pushed the stock to a close of $82.47 on Aug. 22, which is roughly 11% below its 52-week high.

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Currently, the stock is trading at 24 times forward earnings.

Zoom released its fiscal Q2 2026 earnings on Aug. 21, after the market close. The company delivered a strong quarter, beating expectations with an adjusted EPS of $1.53. That beat the consensus estimate and marked a 10% rise year-over-year (YOY). Revenue came in at $1.22 billion, exceeding estimates and marking a 4.7% increase compared to the prior-year quarter.

Enterprise revenue led the way, increasing 7% YOY to $730.7 million, while the online segment rose modestly by 1.4% to $486.6 million. The company also expanded its operating margins. The non-GAAP operating margin improved to 41.3%, and free cash flow increased by 39% YOY.

Looking ahead, Zoom raised its full-year fiscal 2026 guidance with adjusted EPS now projected between $5.81 and $5.84 and revenue guidance revised upward to $4.825 billion to $4.835 billion. For the ongoing quarter, Zoom expects revenue of around $1.21 billion to $1.22 billion.

Meanwhile, analysts anticipate EPS to increase 12% YOY to $3.23 in the current fiscal year, before declining slightly to reach $3.21 in the next fiscal year.

Following Zoom’s impressive Q2 results and raised fiscal-year guidance, Wall Street’s reactions have ranged from bullish optimism to cautious realism.

Rosenblatt recently raised its price target for Zoom from $100 to $110, retaining a “Buy” rating. The upgrade reflects Zoom’s stable revenue growth, boosted fiscal 2026 guidance, clear AI monetization pathways, ongoing share repurchases, and heightened growth visibility.

RBC Capital also lifted its price target on Zoom to $100 from $95, reiterating an “Outperform” rating after the company posted solid Q2 results that topped expectations. Meanwhile, Needham reiterated a “Buy” rating on Zoom with a price target of $100, citing strong Q2 results.

However, some analysts preferred a more cautious stance. KeyBanc cut its price target on Zoom to $69 from $73, maintaining an “Underweight” rating despite the company’s better-than-expected Q2 results. KeyBanc attributed the lower target to ongoing SaaS sector multiple compression.

ZM stock has a consensus “Moderate Buy” rating overall. Out of 30 analysts covering the stock, nine recommend a “Strong Buy,” two analysts suggest a “Moderate Buy,” 17 analysts stay cautious with a “Hold” rating, and two have a “Strong Sell” rating.

ZM stock’s average analyst price target of $90.08 indicates an upside potential of 11.6%. The Street-high target price of $115 suggests 42% potential upside from here.

On the date of publication, Subhasree Kar did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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