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Is Zoom Communications stock(NASDAQ: ZM) pricey at 18 times earnings? Not at all.
Especially if you consider the fact that the company’s earnings could be significantly higher as it pivots from a "meeting app" to an AI-powered "system of action." We believe that Zoom can re-accelerate its top line as its Enterprise and AI segments take flight.
While revenue growth sat at a modest 4.4% for fiscal 2026, reaching $4.87 billion, the underlying momentum in high-value contracts is telling a different story.
For context, Zoom’s Enterprise revenue grew 7.1% last quarter, and customers contributing over $100,000 annually jumped by 9.3%.
As Zoom’s agentic AI capabilities—like the "Custom AI Companion" and "AI Expert Assist" - become indispensable for the modern workforce, the company is positioned to capture a larger slice of the $100 billion+ UCaaS and Contact Center markets.
Combine revenue potential with the fact that Zoom’s margins are among the best in the software world.
Unlike many tech peers that struggle with profitability, Zoom maintains a staggering non-GAAP operating margin of 40%.
Even its GAAP net income saw a massive 92% year-over-year increase in the latest fiscal year, hitting $1.9 billion.
As high-margin software services and AI add-ons like Zoom Phone (now at 10 million seats) and Zoom CX continue to scale, these efficiencies should drop directly to the bottom line.
See also,What GameStop’s $55B Bid For eBay Means For Investors So is a significant expansion in earnings possible? Absolutely.
When you combine a stabilizing revenue base with a shift toward high-margin AI subscriptions and a disciplined cost structure, the "earnings engine" is just starting to rev.
Now, if earnings grow substantially, the P/E multiple will shrink proportionally, assuming the stock price stays the same.
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