Zoom Earnings Preview: Stock Testing Support as AI Initiatives Take Center Stage

Zoom Video Communications Inc. (NASDAQ: ZM) is set to release its latest earnings report today, a pivotal moment for the company as it navigates a shifting landscape in the communication and collaboration sector. The stock is currently down 6.64% in the last five days, trading just above $79. The stock's recent performance and broader market conditions warrant a cautious approach.

Analysts expect Zoom to report EPS of $1.44, a slight increase from $1.38 a year ago, indicating modest earnings growth. Revenue is projected to reach $1.21 billion, reflecting an estimated 3.05% year-over-year sales increase. Overall, forecasts point to steady but moderate gains in both earnings and revenue for the upcoming report.

The past 52 weeks have seen ZM fluctuate between $64.41 and $92.80, with a modest 0.86% increase overall. This relatively narrow range suggests a period of consolidation, as the company works to integrate new strategies and technologies. The upcoming earnings report will be crucial in determining whether Zoom can break out of this range and sustain a more robust upward trend.

A significant tailwind for Zoom has been the recent analyst upgrades, most notably from Rosenblatt Securities, which raised its price target to $115, citing “highly bullish” channel checks and increased revenue estimates for fiscal years 2026 and 2027. Rosenblatt's optimism stems from Zoom's strategic shift towards a partner-first sales model, which is expected to enhance the marketability of its products and services. This shift could prove to be a game-changer, allowing Zoom to leverage the expertise and reach of its partners to penetrate new markets and customer segments.

Zoom's commitment to innovation, particularly in the realm of artificial intelligence, is another factor driving positive sentiment. The unveiling of AI Companion 3.0, with its advanced agentic AI capabilities, at Zoomtopia 2025, signals the company's intent to embed AI deeply into its platform.

The offering of AI Companion 3.0 at no additional cost for paid Zoom Workplace accounts is a strategic move to drive adoption and demonstrate the value of its AI-powered features. Furthermore, Zoom's $10 million commitment to democratizing AI education through its Zoom Cares initiative underscores its long-term vision and commitment to shaping the future of AI.

Zoom's inclusion in the 2025 Gartner Magic Quadrant for Contact Center as a Service (CCaaS) is further validation of its strategic direction. This recognition highlights the success of its AI-first platform strategy, which integrates artificial intelligence for both self-service automation and live agent assistance, positioning Zoom as a formidable player in the evolving contact center market.

However, not all signals are unequivocally positive. CEO Eric Yuan's sale of a significant number of shares in early 2025 raises some eyebrows. While insider selling is not always indicative of negative sentiment, it can sometimes signal a lack of confidence in the company's short-term prospects.

Institutional investment movements, such as Algert Global LLC's increased stake in Zoom, provide a counterpoint to the insider selling. These investments suggest that institutional investors see value in Zoom's stock, despite the potential headwinds. The overall picture is therefore mixed, with both positive and negative signals vying for attention.

From a contrarian perspective, one might argue that the market is overly optimistic about Zoom's AI initiatives. While the integration of AI into the platform is undoubtedly a positive development, it remains to be seen whether these features will translate into meaningful revenue growth. Competitors are also investing heavily in AI, and it is possible that Zoom's AI offerings will not be differentiated enough to justify the current valuation. The market might be pricing in a best-case scenario for Zoom's AI initiatives, without fully accounting for the potential risks and challenges.

Moreover, while the shift to a partner-first sales model is promising, it also introduces new complexities and challenges. Managing a network of partners requires careful coordination and oversight, and there is a risk that the partners may not be as effective as Zoom's own sales force. The success of this strategy will depend on Zoom's ability to effectively manage its partner relationships and ensure that its partners are aligned with its overall goals.