Zoom (ZM) falls 18.1% after mixed earnings and new AI story – What’s changed?

• In late February 2026, Zoom Communications reported fourth-quarter revenue of approximately USD 1.25 billion and net income of USD 674.08 million, and with new guidance for fiscal 2027 and the completion of a USD 2.7 billion share repurchase program, it reported full-year revenue of USD 4.87 billion and net income of USD 1.9 billion, capping it off.
• Beyond its core business, Zoom has highlighted its growing focus on AI-powered products and the potential value of its early-stage investment in Anthropic, which some commentators have suggested could represent a significant portion of Zoom’s overall market value if current expectations come true.
• Here, we examine how Zoom’s mixed earnings, strong revenue and moderate earnings outlook reshape the existing investment story built around AI and corporate growth.

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Zoom Communications Investment Story Summary

To own Zoom today, you need to believe that its AI-first platform and broader enterprise offerings can offset increased competition from its maturing core video business and bundled suite. The latest results support the top-line story for AI and the company, but a softer earnings outlook and sharp decline in stock prices put the focus on key near-term catalysts. It’s about convincing the market that AI products and new products can drive profitable growth without compressing margins. As investment in AI and platforms increases, the biggest risk in the near term remains margin pressure.

Against this backdrop, Zoom’s completion of its $2.7 billion stock repurchase program stands out. While profits are supported by forward earnings outlook mixed with one-time gains, the retirement of approximately 11.9% of the shares will be significant in how each share contributes to future performance. For investors who are eyeing AI monetization as a key catalyst, the move from past stock buybacks to Zoom’s next priority adds a new layer to how they think about risk and reward.

But investors also need to understand how increased AI spending could pressure profit margins…

Read the full story on Zoom Communications (it’s free!)

The Zoom Communications story projects sales of $5.3 billion and revenue of $1.2 billion by 2028.

We reveal how Zoom Communications’ projections resulted in a fair value of $97.59, which is 32% higher than the current price.

explore other perspectives

Some of the most optimistic analysts were forecasting sales of around USD 5.5 billion and profits of USD 1.8 billion by 2028, but these are much more optimistic numbers than the consensus and could raise questions if these assumptions are reconsidered due to margin pressure from AI and a slowdown in core demand following this report.

Check out 4 other fair value estimates for Zoom Communications – Find out why the stock is worth 44% more than its current price.

reach one’s own conclusion

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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.

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