Zoom Rises 8% in 3 Months: Here's Why You Should Buy the Stock Now

Zoom shares have outperformed the broader market over the past three months, driven by accelerating AI innovation and platform expansion within the enterprise segment. Adoption of Zoom AI Companion grew nearly 40% quarter-over-quarter, with enterprise revenues increasing 6% year-over-year and accounting for 60% of total revenues. The company's fiscal Q2 guidance projects revenues between $1.195 billion and $1.2 billion, with non-GAAP diluted EPS between $1.36 and $1.37.

Analysis

Zoom Communications, Inc. (ZM) has demonstrated notable market outperformance, with its shares gaining 7.6% in the trailing three months, surpassing the Zacks Computer and Technology sector's 4.8% return, the S&P 500's 0.9% return, and the Zacks Internet – Software industry's 1.1% growth. This performance is primarily attributed to its accelerating AI-driven innovation and robust expansion within the enterprise segment. The adoption of Zoom AI Companion surged nearly 40% quarter-over-quarter, and the company has begun monetizing its AI capabilities with the launch of Custom AI Companion, which has received positive initial feedback from Global 2000 trial customers. Enterprise revenues grew approximately 6% year-over-year in the fiscal first quarter, now constituting 60% of total revenues, an increase of two percentage points from the prior year. Furthermore, the number of customers contributing over $100,000 in trailing 12-month revenues increased by 8% year-over-year, accounting for 32% of total revenues. For the second quarter of fiscal 2026, Zoom projects total revenues between $1.195 billion and $1.2 billion, and non-GAAP diluted earnings per share between $1.36 and $1.37. While the Zacks Consensus Estimate for Q2 revenues of $1.2 billion indicates a 2.96% year-over-year growth, the consensus for earnings at $1.37 per share suggests a 1.44% year-over-year decline, though Zoom has a strong record of surpassing earnings estimates, averaging a 9.46% surprise over the last four quarters.

Key Decisions for Investors

• Investors should consider Zoom's recent outperformance and AI-driven product enhancements, such as the AI Companion, as positive indicators for potential further upside, aligning with the article's bullish sentiment.
• Monitor the adoption and monetization success of the new Custom AI Companion, as this will be crucial for sustained differentiation against competitors like Microsoft Teams, Cisco Webex, and Google Workspace.
• Evaluate the upcoming Q2 fiscal 2026 earnings report against both company guidance and consensus estimates, particularly focusing on enterprise segment growth and the impact of AI initiatives on revenue and profitability, given the slight projected YoY EPS decline.
• Assess the company's ability to continue winning large enterprise deals, such as the noted financial institution consolidating its tech stack with Zoom, as a key metric for ongoing market share gains and revenue diversification.