Stifel, a financial services firm, has increased its price target for Zoom Video Communications Inc. (NASDAQ: NASDAQ:ZM) to $70.00, up from the previous $65.00.
The firm has decided to maintain a Hold rating on the stock. This adjustment follows recent developments witnessed by analysts at Zoomtopia, the company's annual user conference.
During the event, held at Zoom's new San Jose Experience Center, the company showcased several AI product demonstrations.
The introduction of Zoom AI Companion 2.0 was a notable highlight, marking an evolution of the tool from a simple assistant to a combination of assistant and agent functionalities.
Stifel's analysis acknowledges Zoom's AI advancements as among the best in the sector covered by the firm. The announcements made on Wednesday regarding the launch of paid AI SKUs (stock keeping units) for Zoom Workplace are seen as a strategic move to accelerate revenue growth by leveraging product innovation.
The firm notes that Zoom's position in the Unified Communications as a Service (UCaaS) market provides a competitive edge in the ongoing AI technology development race. However, despite these advancements, Stifel expresses caution, pointing to the competitive nature of the market and ongoing customer retention challenges.
In other recent news, Zoom reported Q2 2025 earnings and revenue that exceeded expectations, with non-GAAP income from operations reaching $456 million and total revenue amounting to $1.16 billion.
This led to a revision of the full-year revenue outlook to between $4.63 billion and $4.64 billion, with non-GAAP earnings per share projected to be between $5.29 and $5.32. Baird, Mizuho, and RBC Capital Markets maintained their Outperform rating on Zoom, while BTIG, Stifel, Citi, Deutsche Bank (ETR:DBKGn), and Goldman Sachs (NYSE:GS) have maintained a neutral stance.
In terms of mergers and partnerships, Zoom has teamed up with ServiceNow (NYSE:NOW) to integrate AI capabilities for enhanced workflow automation, set to launch in the first half of 2025. The company also launched its cloud phone service in India, marking the first cloud private branch exchange (PBX) solution in the country.
Zoom appointed Michelle Chang, formerly of Microsoft (NASDAQ:MSFT), as its new Chief Financial Officer. The company has introduced new features and products aimed at improving compliance and security, including Zoom Compliance Manager Plus, Meeting Survivability, and Zoom Mesh for Meetings. Additionally, the company formed a partnership with Mitel to provide a hybrid cloud solution, expected to be available in the first half of 2025.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Zoom's financial position and market performance, complementing Stifel's analysis. Zoom's stock has shown strong momentum, with a 24.95% price return over the last three months, and is currently trading near its 52-week high at 93.58% of that peak. This aligns with Stifel's increased price target and reflects growing investor confidence in Zoom's strategic direction.
InvestingPro Tips highlight Zoom's financial strength, noting that the company "holds more cash than debt on its balance sheet" and has "liquid assets exceed[ing] short term obligations." These factors provide Zoom with financial flexibility to invest in AI innovations, as showcased at Zoomtopia.
The company's impressive gross profit margin of 75.89% for the last twelve months ending Q2 2025 underscores its operational efficiency. This robust profitability supports Zoom's ability to fund ongoing AI developments, which Stifel identified as among the best in the sector.
For investors seeking a deeper understanding of Zoom's potential, InvestingPro offers 11 additional tips, providing a comprehensive view of the company's prospects in the competitive UCaaS market.
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