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    Zoom (ZM) Stock Reprices Despite 40% Margin And Stronger AI Traction

    Simply Wall St·08/26/2026 23:35:18
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    Zoom Communications stock just dropped 7% in a day, yet the headline number that actually hit the tape was a punchy Q2 profit story. Revenue came in at about US$1.28b and non GAAP operating margin held at a hefty 40%. The emotional reset is happening in the valuation, not in the income statement.

    Coming into the print, Zoom was already down over the past quarter and trading on a single digit P/E compared with much richer software peers. Today's selloff looks less like a collapse in the video and collaboration business and more like a market that is wrestling with how much of this earnings strength it really trusts.

    Love Zoom Communications' 40% non GAAP operating margin but concerned that the market is treating the stock like a value trap after this selloff on a single digit P/E? Take a look at our screener of resilient, higher conviction ideas in the 75 resilient stocks with low risk scores.

    Q2 2027 Earnings Summary

    • Revenue, Q2 2027 vs. Q2 2026: US$1,277.2m vs. US$1,217.2m (up about 4.9%)
    • Net Income (Excl. Extra Items), Q2 2027 vs. Q2 2026: US$1,542.4m vs. US$358.6m (very large increase, more than 4x)
    • Basic EPS, Q2 2027 vs. Q2 2026: US$5.27 vs. US$1.19 (very large increase, more than 4x)
    • Non GAAP Operating Margin, Q2 2027 vs. Q2 2026: 40.0% vs. 41.3% (slight margin contraction)

    Prefer clean charts over scrolling through filings and spreadsheets on Zoom Communications? You can get the full visual picture of the stock, including how the valuation compares at a glance, in our company report for Zoom Communications.

    NasdaqGS:ZM Trailing 12-Month Revenue & Expenses Breakdown as at Aug 2026
    NasdaqGS:ZM Trailing 12-Month Revenue & Expenses Breakdown as at Aug 2026

    Evaluating Zoom’s AI and Enterprise Bull Story

    Bulls argue Zoom Communications is becoming an AI first enterprise platform rather than a pure video utility. Q2 shows some of the required milestones being hit. Enterprise revenue grew 7.8% and now makes up 62% of total revenue. Customers contributing more than US$100,000 over the past year increased and now drive a third of revenue. That aligns with the idea of deeper, multi product relationships.

    The AI monetization pillar also shows proof points. Paid AI was included in 9 of the top 10 customer experience deals. Zoom Virtual Agent customer count rose very sharply and Zoom CX annual recurring revenue grew at a high double digit rate. Workvivo passed US$100m in annual recurring revenue and Zoom Revenue Accelerator customers grew 41%. Together with a 40% non GAAP operating margin and higher full year guidance, the earnings detail supports the view that the platform and AI shift is gaining operational traction.

    Compare Zoom Communications' strong AI driven enterprise metrics with how institutional analysts are recalibrating their expectations after the 7% share price drop. See the consensus price target analysis for Zoom Communications to gauge whether Wall Street thinks this earnings profile still lines up with the current valuation.

    Zoom Bear Case: Growth Ceiling and Online Drag Persist

    The core bearish worry for Zoom Communications is that AI expansion cannot fully offset a maturing meetings business and a pressured Online segment. Q2 shows real progress in Enterprise, yet also some of the ceilings bears focus on. Revenue grew 4.9% and Enterprise net dollar expansion is only 99%, which still points to flattish spend per existing large customer. RPO grew 14% and non current RPO 25%, but Q3 revenue and EPS guidance came in soft versus Street expectations, which backs concerns that near term growth is capped.

    UBS highlighting Online slowdown as a headwind looks consistent with the modest top line growth and the need for Enterprise to carry more of the load. The small contraction in non GAAP operating margin to 40.0% and cautious guide give bears some support that mix shift and compliance plus AI investment can pressure profitability even while new products gain traction.

    After Q2 guidance and the 7% post earnings share price fall, are Online headwinds and insider selling just surface issues or early warning signs? Review the independent risk analysis for Zoom Communications which shows 3 important warning signs

    Stay Ahead With Simply Wall St

    If Zoom Communications' 7% drop on a single digit P/E after strong Q2 profitability has your attention, register free with Simply Wall St and add it to your Watchlist to track price against fair value and watch how sentiment evolves around each earnings update. Once you decide to take a position, use the Portfolio Command Center to cut through noise and focus on the most important changes to your holdings. For a broader view on what other investors are thinking, tap into the Community and see different angles on the same stock. By spotting potential catalysts and risks early, you give yourself a better chance to react quickly and stay ahead of the market.

    Seeking Alternatives Beyond Zoom Communications?

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.