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Zoom (ZM) is back in the spotlight. Once the poster child of the pandemic boom, the stock has since fallen out of favor as growth slowed and competitors like Microsoft Teams and Cisco Webex crowded the market. But its latest earnings data may be shifting the narrative.

Revenue is accelerating again, guidance was raised, and new AI driven products are gaining real traction with enterprise clients. Despite this progress, the stock still trades at bargain valuations and is supported by a strong cash position with no debt.

The question for investors is whether this quiet transformation is being overlooked. With AI adoption ramping up and enterprise accounts expanding, could 2025 mark the beginning of a long-term rebound – or just another short-lived bounce?

Today, Zoom is no longer just a video meeting tool. It’s expanding into a broader collaboration and communications platform, with offerings like Zoom Phone, Contact Center, Workvivo, and AI Companion.

These products are fueling growth, strengthening Zoom’s enterprise presence, and making its customer relationships stickier. Backed by one of the strongest balance sheets in software, Zoom has the firepower to keep investing and buying back shares.

Still, optimism comes with caveats. Much of its growth was pulled forward during the pandemic, and it’s unclear if Zoom can return to sustained momentum. Heavyweights like Microsoft and Cisco remain tough competition, bundling Teams and Webex into broader enterprise packages. And while AI is creating excitement now, automation could ultimately reduce headcounts and weigh on Zoom’s per seat pricing model.

Investors should keep three risks in mind. First, execution: Zoom must prove it can succeed across multiple products beyond video meetings. Second, competition: Microsoft and Cisco are formidable rivals with bundled offerings. Third, growth trajectory: even with AI momentum, maintaining acceleration will be a challenge. These risks explain why sentiment, though improving, remains cautious.

So where does this leave investors today? Let’s map it out using the IDDA framework (Capital, Intentional, Fundamental, Sentimental, Technical) to take a deeper look at Zoom’s setup.

IDDA Point 1 & 2: Capital & Intentional

Before investing in Zoom stock, ask yourself:

• Do you want exposure to a profitable, cash-rich mid-cap tech that still dominates enterprise videoconferencing?
• Do you believe Zoom’s expansion into AI-driven collaboration tools can reignite growth and diversify revenue?
• Are you comfortable with slower growth and heavy competition, betting that strong cash flow and undervalued multiples provide a margin of safety?

Zoom’s history since the pandemic has been marked by sharp swings, soaring to record highs before falling back as demand normalized. Today, the stock looks undervalued compared to peers, with strong profitability and cash reserves providing downside protection. The upside could be significant if Zoom’s AI and enterprise strategy delivers sustained growth.

If you buy into Zoom’s thesis as a sticky, cash generating collaboration platform with untapped AI potential, the risk/reward could be compelling. But if your tolerance for competition, slower growth, and execution risks is low, the safer choice may be to watch from the sidelines until Zoom delivers consistent acceleration.

IDDA Point 3: Fundamentals

Zoom had a strong second quarter, with revenue growing 5% year-over-year to $1.22 billion, beating both its own guidance and Wall Street’s expectations. Growth also picked up speed compared to the previous quarter, showing that demand is improving.

Enterprise sales were a bright spot, rising 7%, and the number of large customers spending more than $100,000 annually grew 9%. Zoom also added 1,400 new enterprise clients, the first time in several quarters that its big customer base has expanded.

Profitability continues to improve. Operating margins climbed to 41.3%, higher than what management predicted, helped by cost control and better efficiency as the business scales. Earnings per share came in at $1.53, up 10% year-over-year, and well ahead of analyst estimates. Gross profit margins also rose to nearly 80%, one of the best in the industry, while spending on sales and marketing fell as a percentage of revenue because Zoom is segmenting its sales approach more effectively.

Artificial intelligence is quickly becoming a key growth driver. Zoom AI Companion usage grew four times compared to last year, helping drive new deals and upselling existing customers. High value products like Zoom Contact Center and Workvivo saw customers spending more than $100,000 annually rise 94% and 142%, respectively. These multiproduct deals not only increase revenue but also make Zoom’s relationships with customers stickier over the long-term.

After this strong performance, management raised its outlook for the full year. Revenue is now expected to be between $4.825 billion and $4.835 billion, higher than previous estimates. Profit guidance was also raised, with earnings per share now expected to land between $5.81 and $5.84, alongside higher free cash flow. The company also plans to continue buying back its own shares, which should further boost earnings.

Zoom’s balance sheet remains one of its greatest strengths. The company has $7.8 billion in cash and no debt, which is nearly one-third of its market value. This provides plenty of flexibility to invest in new opportunities and reward shareholders.

With the stock trading at less than 10 times its free cash flow and about 9 times its earnings after accounting for cash, Zoom looks attractively priced for a company that is profitable, growing again, and deepening its hold on the enterprise market.

• Fundamental Risk: Medium – High

IDDA Point 4: Sentimental

Strengths:

• Strong pandemic user base likely to stick around and fuel ongoing growth.
• Video-first platform with higher customer satisfaction than rivals.
• Simple, low-cost model supports strong margins and consistent profitability.

Risks:

• Risk of stretching too thin by expanding into multiple products at once.
• Tough competition from Microsoft and Cisco, who can bundle offerings.
• Growth slowed after the pandemic surge; unclear if it can accelerate again.

Investor sentiment around Zoom is turning more positive after its latest earnings beat, which drove a quick jump in the stock price. Many analysts see this as a potential turning point after years of decline since the pandemic boom. The market has been flocking to the safety of large-cap tech stocks, leaving mid-cap names like Zoom overlooked and undervalued, which makes it attractive as a contrarian play.

Confidence is being boosted by strong adoption of Zoom’s new AI products, growing enterprise traction, and its reputation as the “gold standard” for videoconferencing. Analysts highlight that Zoom’s valuation is at bargain levels compared to its profitability and cash reserves, supporting long-term upside.

At the same time, risks are acknowledged, particularly the possibility that AI driven automation could reduce corporate headcount and weaken per seat pricing, and that a weaker economy could slow enterprise spending. Even so, sentiment remains constructive, with most seeing more upside than downside thanks to AI momentum, sticky subscription revenue, and the company’s strong balance sheet.

• Sentimental Risk: High

IDDA Point 5: Technical

On the weekly chart:

• Current pattern: Zoom has been in consolidation (trading sideways) since 2022.
• Ichimoku cloud: Bullish but flat and thin, signaling weak momentum.

On the weekly chart, Zoom stock was in a strong uptrend from 2020, peaking at $588 in October that year. Since the pandemic boom, the stock has been in a steady downtrend, followed by a long consolidation phase from 2022 to the present, with no clear signs of a long-term recovery yet.

The Ichimoku cloud has turned bullish, but because it remains thin and flat, this suggests the momentum is weak and the price may simply be testing the upper end of its consolidation range rather than breaking out into a new trend.
 

(Click on image to enlarge)

Meanwhile, on the daily chart:

• Current pattern: Price action looks choppy and sideways, signaling consolidation.
• Last candlestick: A strong bullish move broke above the Ichimoku cloud in a single day.
• Future cloud: Direction is unclear, but this could signal the end of the bearish phase and the potential start of a bullish trend.
• RSI is overbought at 71.79, which signals a potential pullback in the near-term.

On the daily chart, Zoom was in an uptrend from August to November 2024, but it has since shifted into a choppy, sideways consolidation. The latest candlestick showed a strong bullish move that broke above the Ichimoku cloud in a single day. While the future cloud remains uncertain, this could indicate the end of the bearish phase and the potential start of a new bullish trend.

However, the RSI is overbought at 71.79, suggesting a possible pullback in the near-term. If positive sentiment holds and the price breaks above the $87 resistance level, it would confirm a continued bullish trend. If not, consolidation is likely to persist, creating swing trading opportunities for those aiming for short-term profits.
 

(Click on image to enlarge)

Investors looking to get into Zoom stock can consider these Buy Limit Entries:

• Recent market price: 82.47 (High Risk – FOMO entry)
• 78.41 (High Risk)
• 74.03 (Medium Risk)
• 69.52 (Low Risk)

Investors looking to take profit can consider these Sell Limit Levels:

• 87.61 (Short-term)
• 92.85 (Medium-term)
• 101.76 (Long-term)
• 107.21 (Long-term)

Here are the Invest Diva ‘Confidence Compass’ questions to ask yourself before buying at each level:

1. If I buy at this price and the price drops by another 50%, how would I feel? Would I panic, or would I buy more to dollar-cost average at lower prices? This question also reveals your confidence in the asset you’re planning to invest in.
2. If I don’t buy at this price and the stock suddenly turns around and starts going up again, will I beat myself up for not having bought at this level?

Remember: Investing is personal, and what is right for me might not be right for you. Always do your own due diligence. You should only invest based on your own risk tolerance and your timeframe for reaching your portfolio goals

• Technical Risk: High

Final Thoughts on Zoom (ZM)

Zoom has moved beyond being just a pandemic video tool and is steadily transforming into a full collaboration platform with products like Zoom Phone, Contact Center, Workvivo, and AI Companion. These offerings are gaining traction, especially with AI driving new adoption, while the company’s strong cash reserves and profitability give it plenty of room to keep investing and buying back shares.

That said, challenges remain. Much of Zoom’s growth was pulled forward during the pandemic, and competition from Microsoft and Cisco is fierce. While AI is an exciting growth driver, it also creates uncertainty around Zoom’s per seat pricing model. The company must prove it can deliver consistent growth across multiple products, not just meetings.

Technically, the stock has been stuck in a sideways pattern since 2022. A recent breakout above the Ichimoku cloud hints at a potential shift toward a bullish trend, but the overbought RSI suggests a pullback may come first. A decisive break above resistance would confirm momentum, while extended consolidation could still create short-term trading opportunities.

Key Takeaway

So, is Zoom stock still worth buying in 2025? If you believe in its AI-driven growth story and undervalued fundamentals, the long-term upside looks promising. But if you’re cautious about competition and execution risks, it may be wise to wait for stronger confirmation before jumping in.

• Overall Stock Risk: High

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