Zoom Communications, Inc. (NASDAQ:ZM) is the video-meetings company that became a household name during the pandemic and is now remaking itself into an AI-first work platform. At about $28 billion, it clears every structural index test. It is also one of the few genuinely cheap names on our list of 9 New Contenders for the S&P 500 Index. Zoom trades at near 9 times trailing earnings and about 15 times next year’s expected profit – the figures are remarkably low for a profitable software company. It also sits on roughly $7.2 billion in net cash, close to a quarter of its market value, so the market is pricing it almost as a business with no growth left.
Bull Case
Zoom has beaten Wall Street’s earnings estimates in 17 of the past 18 quarters, a record few software companies can match. Additionally, the company runs a strong balance sheet with far more cash than debt. It is also pushing its AI Companion assistant to turn its enormous meetings base into a broader workplace platform spanning phone, chat, scheduling, and contact-center tools. On fundamentals, Zoom would be one of the easiest additions the S&P 500 committee could make, and its low multiple means buyers are not paying up for that steady profit and cash pile. The bulls find the combination rare on a list full of expensive names.
The stock achieved an 8.34% return over the last six months. For context, the Insider Monkey Billionaire Index gained 11.6% during the same period.
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Bear Case
The almost stagnant growth holds the bear case. Zoom’s core meetings business is expanding only in the low single digits. Furthermore, the market still treats the company as a pandemic winner whose best days are behind it, which keeps a lid on the multiple. That slow growth is also a reason the index committee might not rush to add it even though it qualifies, since the pool of eligible names is deep and faster growers tend to catch the eye first. A cheap stock can stay cheap for a long time if investors see little reason for the growth rate to pick back up.
Bottom line
The bottom line is that Zoom is one of the most obviously eligible names by the numbers. It is profitable, highly liquid, and cheap. Concern regarding the company’s profitability, however, is hanging over it at all. The open issue is whether its modest growth gives the committee a reason to choose it when a seat opens. And whether investors will re-rate a business many have written off. If the AI-platform shift rekindles the growth, the cheap multiple could look like a bargain in hindsight. If meetings keep crawling, the stock may simply stay inexpensive.
Market Sentiment
On positioning, Insider Monkey’s database shows 71 hedge funds held Zoom Communications, Inc. at the end of the second quarter of 2026, up from 60 the quarter before, a sign that value-minded investors are warming to the profitable story even as growth stays slow.
Value-minded funds are warming to Zoom. See what else Wall Street analysts call cheap in our list of the 10 best affordable stocks to buy.
And to see what other securities made it into our list of 9 New Contenders for the S&P 500 Index, click HERE.
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.
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This article is originally published at Insider Monkey.
