Zoom is quietly transitioning from a pandemic-era growth story to a highly profitable enterprise software platform. While investor sentiment remains pinned on slowing sales growth, the company’s fundamentals tell a different story. This means improving margins, accelerating returns on capital, and expanding our portfolio of enterprise products that are steadily gaining market share. While expectations remain compressed, Zoom is gaining momentum and starting to break out of its multi-year base, creating an attractive risk-reward profile for investors looking to look beyond the “post-COVID” narrative. Trade Timing and Outlook Zoom appears to be completing a multi-year bottom formation after spending nearly two years between $60 and $85. The recent breakout of the $86 resistance level indicates an important change in market structure. ZM has decisively broken above the $85-$86 level that had limited its upside through 2024. ZM stock has outperformed the S&P 500 by about 5% over the last month, suggesting improving institutional demand. From a technical perspective, this setup supports a move towards the $100 range and could extend towards $120 if earnings confirm a breakout. Fundamentals: A cash-generating business Despite market skepticism, Zoom’s fundamentals remain remarkably strong: Forward P/E: ~14.5x Net profit margin: ~33% Forward revenue growth: ~3.5% Balance sheet: Liquid net cash position of over $7 billion Revenue growth has slowed, but profitability remains strong. Zoom is not a company expected to decline over time, and is generating free cash flow at levels typically associated with mature software leaders. The disconnect between valuation and financial quality creates a margin of safety rarely found in large-cap software. The Bull Case: A Quiet Transition to Profits Growth: Zoom is no longer pursuing expansion, instead generating cash flow and returning capital through share buybacks. Contact centers as a hidden growth driver: Zoom Phone and contact centers continue to experience double-digit growth. These products offer high switching costs and excellent economics, providing a reliable path to re-accelerating growth. AI as Margin Enhancement: Zoom’s “AI Companion” strategy is designed to increase stickiness rather than chasing headline revenue, and introduces optional upside without compressing margins in premium tiers. Return on Capital Flywheel: With more than $8 billion in cash and a declining share count, aggressive share repurchases drive earnings per share growth even in a low-growth environment. Option Strategy: Risk-Specified Bullish Exposure To represent the potential for ZM’s growth to re-accelerate, we prefer to buy the February $85/95 call vertical with a $3.49 debit. This includes: Buy ZM February 20, 2026 $85 Call @ $4.43 Sell ZM February 20, 2026 $95 Call @ $0.94 Trading Indicators: Maximum Risk: $349 per contract if ZM is less than $85 at expiration Maximum Reward: $95 ZM at expiration If over $651 per contract Breakeven point: $88.49 This structure will show trades at the latest price on OptionsPlay. It continues to rise while limiting the amount of capital at risk, which is well consistent with the thesis of stable multiple expansions rather than explosive growth. Summary Zoom’s hyper-growth story is long gone, but with strong cash generation, disciplined management, and an increasingly diverse product suite, the company is quietly regaining investor confidence. With momentum building and capital returns accelerating, ZM offers an attractive risk-reward profile for investors seeking quality, selectivity and downside protection in late-cycle market environments. Disclosure: None. All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The content is general in nature and does not reflect your unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
