These Analysts Increase Their Forecasts On Zoom After Upbeat Q1 Results

Zoom beat first-quarter expectations with revenue of $1.24 billion versus $1.22 billion consensus and adjusted EPS of $1.55 versus $1.42 expected. The company also raised FY27 guidance, now targeting revenue of $5.08 billion to $5.09 billion and adjusted EPS of $5.96 to $6.00, both above prior expectations. Management highlighted accelerating AI adoption, including 184% year-over-year growth in paid AI Companion users. Shares rose 10.4% to $106.89 on the announcement.

Analysis

The market is treating this as a cleaner-than-expected AI monetization proof point, but the more important signal is that Zoom is still expanding without needing a broad enterprise re-acceleration. That matters because it suggests the product mix is shifting toward higher-value workflows rather than pure seat-count recovery, which should support multiple expansion even if core UCaaS growth remains mid-single digits. The second-order winner is any vendor selling adjacent collaboration or workflow automation: once AI note-taking and action capture become table stakes, budget can migrate from standalone meeting tools toward integrated productivity suites.

The risk is that the current rerating may be ahead of durability. AI feature uptake is typically front-loaded: adoption spikes after launch, then normalizes unless it translates into measurable seat expansion, lower churn, or attach of higher-tier bundles over the next 2-3 quarters. If paid AI usage remains a feature story rather than an operating-system story, investors could quickly refocus on the slower structural growth profile and compress the multiple back toward software peers with clearer recurring expansion.

For competitors, this is mildly negative for point solutions in meeting intelligence and transcription, because Zoom is now bundling enough functionality to force price competition. It is more constructive for large platform players that can absorb AI features inside a broader suite, since enterprise buyers will prefer fewer vendors once AI becomes embedded in daily workflows. The key question is whether Zoom can convert engagement into retention and ARPU before the next budget cycle; that is the catalyst that determines whether this is a one-quarter pop or the start of a longer re-rate.

Key Decisions for Investors

• Stay tactically long ZM for 2-6 weeks on post-earnings momentum, but size modestly: the setup supports further multiple expansion if management sustains AI attach commentary, yet the move already prices in a meaningful portion of near-term upside.
• Buy ZM June/September call spreads rather than stock to express continuation upside while capping downside if the market fades the AI narrative after the first follow-up quarter.
• Pair trade: long ZM / short a basket of lower-quality collaboration or meeting-intelligence point solutions to express consolidation risk in AI-enabled workflows over the next 1-2 quarters.
• Use strength to trim or hedge if ZM trades into the high-$100s without upward revisions to net retention, billings, or enterprise deal size; that would indicate sentiment outran fundamental proof.
• Watch for a 90-day catalyst check: if AI Companion monetization and My Notes usage convert into higher-tier adoption by the next quarter, add on pullbacks; if not, expect multiple compression back toward software averages.