Is ZM a good stock to buy? We came across a bullish thesis on Zoom Communications, Inc. on ARMR Report Be The Smart Money’s Substack by Bret Rosenthal. In this article, we will summarize the bulls’ thesis on ZM. Zoom Communications, Inc.’s share was trading at $111.62 as of June 1st. ZM’s trailing and forward P/E were 14.96 and 16.42 respectively according to Yahoo Finance.
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Zoom Communications, Inc. provides an Artificial Intelligence-first open work platform for human connection in the Americas and internationally. ZM is increasingly being viewed as a misunderstood artificial intelligence opportunity as the market continues to value the company like a mature video conferencing platform despite growing evidence of a successful transformation into an enterprise AI software provider.
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Following a strong first quarter FY2027 report, Zoom exceeded earnings expectations with EPS of $1.55 versus $1.42, beat revenue estimates, raised full-year guidance, and authorized an additional $1 billion share repurchase program, adding to its existing $1.6 billion authorization.
Management emphasized that Zoom is evolving from a conversation-centric platform into a completion-centric workflow engine powered by agentic AI. The company’s vision is for AI agents to automatically execute tasks after meetings, such as updating CRM systems, drafting follow-up communications, and managing workflows, positioning Zoom as a critical interface layer for enterprise AI adoption. AI Companion monthly active users grew 184% year-over-year, supporting management’s view that customers increasingly regard Zoom as a native AI platform rather than a traditional SaaS provider.
Importantly, Zoom is demonstrating tangible AI monetization through customer consolidation, growing adoption of Zoom Contact Center, and displacement of legacy competitors. Unlike many software companies investing heavily in AI without clear returns, Zoom is generating substantial profitability, reporting a non-GAAP operating margin of 41.1% while also using its own AI tools to reduce operating costs and improve customer satisfaction.
The investment case is further supported by a fortress balance sheet with nearly $8 billion in cash, more than $500 million in quarterly free cash flow, and significant ongoing buybacks. Despite these strengths, Zoom trades at roughly 15.6x forward earnings and a PEG ratio of 0.17, suggesting the market has yet to recognize its AI-driven transformation. If AI adoption and monetization continue accelerating, the company could experience significant multiple expansion, creating substantial upside from current valuation levels.
Previously, we covered a bullish thesis on Zoom Communications Inc. (ZM) by mrmrmrj in January 2025, which highlighted the company’s 10% free cash flow yield, debt-free balance sheet, significant cash reserves, and undervaluation relative to its growth prospects. ZM’s stock price has appreciated by approximately 39.50% since our coverage. Bret Rosenthal shares a similar view but emphasizes Zoom’s AI-driven transformation, expanding monetization opportunities, and potential multiple expansion as enterprise AI adoption accelerates.
Zoom Communications, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held ZM at the end of the first quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of ZM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ZM and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
