- Recently, Citi upgraded Zoom Communications, citing the expansion of the company’s multi-product platform and AI initiatives such as custom AI companions and contact center products as key growth drivers.
- This highlights the widening gulf between earlier concerns about Zoom’s conservative pricing trends and recent optimism about its ability to monetize the AI-enabled collaboration tool.
- Here, we consider how Citi’s renewed focus on Zoom’s AI-driven multi-product strategy could impact the company’s broader investment story.
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Zoom Communications Investment Story Summary
Owning Zoom today typically requires belief that the company’s AI-powered multi-product platform can offset slower core video growth and increased competition. Citi’s Upgrade leans toward that view, but moderate billing growth and cautious revenue forecasts mean the key near-term catalyst remains AI and actual monetization of contact centers. In my view, the biggest risk is that AI revenue growth will be slower than expected, and this news does not fundamentally change that.
Among recent developments, Citi’s focus on Zoom’s custom AI companion and contact center aligns closely with its push around AI-driven upsells and platform adoption. This comes on the back of year-over-year billing growth of just 3.9% and net revenue retention of 98%, dampening expectations for rapid acceleration. How Zoom effectively translates its powerful AI story into paid seats and higher ARPU will likely shape sentiment around…
Read the full story on Zoom Communications (it’s free!)
The Zoom Communications story projects $5.3 billion in revenue and $1.2 billion in revenue by 2028. This would mean flat revenue and 3.4% annual revenue growth, unchanged from current revenue of $1.2 billion.
We reveal how Zoom Communications’ projections resulted in a fair value of $94.96, which is 17% higher than the current price.
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Zoom’s fair value estimates from seven Simply Wall Street communities, which reflect a wide range of independent views, range from approximately US$90 to approximately US$122 per share. In contrast, concerns about increased competition from large bundled communications platforms may help explain why many investors are cautious, and why it may be useful to compare some of these perspectives side-by-side.
Check out 7 other fair value estimates for Zoom Communications – Find out why the stock is worth 51% more than its current price.
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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
Evaluation is complex, but we will simplify it here.
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