Remember when everyone thought Zoom was just a fleeting pandemic darling, destined to fade away as offices reopened? I certainly heard that narrative plenty of times over the past few years. Yet here we are at the end of 2025, and something interesting is happening—the stock is starting to act like it has bigger plans ahead.
It’s funny how markets can stay fixated on one story long after the underlying business has evolved. While many investors still view Zoom through the lens of explosive growth followed by inevitable slowdown, the company has been quietly building a much more sustainable model. And now, with shares pushing through key resistance, it feels like the setup for 2026 could surprise a lot of skeptics.
Why Zoom Deserves a Fresh Look Heading Into 2026
Let’s be honest: the hyper-growth days are gone, and that’s perfectly fine. What Zoom has become is something arguably more valuable in today’s environment—a mature software business generating serious cash with improving margins and a growing enterprise footprint.
I’ve always believed that the best investment opportunities often hide in plain sight, especially when sentiment is overly negative. Right now, expectations for Zoom seem anchored to the idea of permanent deceleration. But dig into the numbers, and you’ll find a company trading at a remarkably reasonable valuation given its financial strength.
Technical Setup: Breaking Out of a Multi-Year Base
From a chart perspective, Zoom spent much of 2023 and 2024 stuck in a wide consolidation range roughly between $60 and $85. It wasn’t pretty—multiple rallies failed at that upper boundary, reinforcing the idea of a stock going nowhere fast.
But late 2025 changed the picture. Shares decisively cleared the $86 level that had acted as stubborn resistance all year. More importantly, they’ve held above it with increasing volume and relative strength versus the broader market.
In my experience watching breakouts, when a stock finally emerges from a long base like this—especially with improving fundamentals underneath—it often has room to run. Initial targets around $100 seem reasonable, with potential for $120 or higher if momentum continues.
The relative performance tells part of the story too. Over the past month or so, Zoom has outperformed the S&P 500 by a noticeable margin. That kind of quiet outperformance often signals institutional accumulation starting to take hold.
Fundamentals: Elite Profitability at a Discount
Perhaps the most overlooked aspect of Zoom today is just how profitable it remains. We’re talking about net margins hovering around a third of revenue—numbers that many mature tech giants would envy.
Add in a forward price-to-earnings multiple in the mid-teens, and you get a rare combination: high-quality earnings at a value-like price. It’s the kind of disconnect that patient investors dream about.
- Forward P/E around 14.5x despite consistent profitability
- Net cash-rich balance sheet with billions in liquidity
- Free cash flow generation rivaling much larger software leaders
- Revenue growth modest but stable at low-single digits
Sure, top-line growth isn’t going to return to pandemic levels. But in a world where many software companies struggle with margin compression, Zoom’s ability to maintain elite profitability while slowly expanding its product suite stands out.
The Enterprise Evolution Happening Under the Radar
One of the biggest misconceptions is that Zoom remains purely a video conferencing tool. In reality, the company has been methodically building out an enterprise communications platform.
Products like Zoom Phone and the Contact Center solution are seeing strong adoption. These aren’t just add-ons—they carry higher switching costs and better economics than the core video product. Think stickier revenue streams with potential for pricing power down the line.
The shift toward enterprise isn’t about explosive growth anymore. It’s about creating a platform that companies rely on daily, with multiple touchpoints across their organization.
I’ve found that these kinds of transitions often get dismissed early on because the growth isn’t immediately obvious in the headline numbers. But over time, as penetration deepens, the compounding effect can be powerful.
AI Strategy: Enhancing Stickiness, Not Chasing Hype
Unlike some companies throwing everything at generative AI in hopes of new revenue streams, Zoom’s approach feels more measured and practical.
Their AI Companion features aim primarily at making the existing platform more valuable—better meeting summaries, improved search, smarter scheduling. These enhancements increase user engagement and make switching to competitors less appealing.
Premium tiers offer optional upgrades without forcing the issue. It’s a strategy that prioritizes margin preservation while creating upside optionality. In my view, this disciplined approach deserves credit in an industry full of AI overpromising.
Capital Returns: The Buyback Flywheel in Motion
With billions in cash and ongoing free cash flow generation, Zoom has become aggressive with share repurchases. This creates a virtuous cycle: fewer shares outstanding means higher earnings per share even with modest revenue growth.
It’s classic mature tech playbook—think Microsoft or Apple in their middle years. When executed well, buybacks can significantly enhance shareholder returns without needing heroic growth assumptions.
Given Zoom’s valuation, these repurchases aren’t just accretive—they’re arguably buying dollars for significantly less than they’re worth.
A Defined-Risk Options Trade for the Bullish Thesis
If you’re intrigued by the setup but want to limit downside exposure, options offer an attractive way to express the view. Rather than buying shares outright or gambling on naked calls, a bull call spread provides defined risk with solid reward potential.
One specific idea heading into 2026: consider the February 2026 expiration $85/$95 call spread. This involves buying the $85 call and selling the $95 call, typically for a net debit around $3.50 (prices will fluctuate).
- Maximum risk: the debit paid (around $350 per spread)
- Maximum reward: $10 spread width minus debit (around $650 potential profit)
- Breakeven: roughly $88.50 at expiration
- Time horizon allows for earnings catalysts and momentum continuation
This structure lets you benefit from a move toward $100+ while capping capital at risk. It’s particularly appealing when you believe in steady appreciation rather than needing a moonshot.
Of course, options involve risks and aren’t suitable for everyone. But for those comfortable with derivatives, this type of vertical spread aligns well with a thesis built on multiple expansion and technical momentum.
Risks to Consider: Nothing Is Guaranteed
To be fair, there are legitimate risks. Competition in enterprise communications remains intense. Economic slowdowns could pressure IT spending. Execution missteps on new products might disappoint.
That said, the current valuation appears to price in quite a bit of pessimism already. With a net cash balance sheet providing downside protection and profitability acting as a margin of safety, the risk/reward skew feels favorable.
Final Thoughts: Quality Meets Opportunity
Zoom in 2026 isn’t about recapturing pandemic glory—it’s about recognizing a high-quality business available at a reasonable price with improving technicals and growing capital returns.
Whether through shares or carefully structured options positions, the setup offers an interesting way to gain exposure to a name that feels misunderstood by the market. In an environment where growth at any price has fallen out of favor, profitable tech companies trading at value multiples deserve attention.
Sometimes the best opportunities aren’t the flashiest ones. They’re the ones that patiently build strength while everyone else looks elsewhere. Zoom might just be entering that phase now.
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