Cloud Software Stocks Under Pressure: Assessing the Investment Case for Zoom, Commvault, and Dropbox

The cloud software sector has faced headwinds in 2025, with investors recalibrating expectations for growth amid macroeconomic uncertainty. Zoom Communications Inc. (ZM), Commvault Systems (CVLT), and Dropbox, Inc. (DBX) represent divergent narratives within this space. This analysis evaluates their recent financial performance, valuation metrics, and long-term growth trajectories to determine whether current price corrections reflect overcorrection or prudent skepticism.

Zoom: Enterprise Transition and AI-Driven Growth

Zoom's Q3 2025 earnings underscored its strategic pivot to enterprise solutions. Revenue rose 4% year-over-year to $1.18 billion, surpassing estimates of $1.16 billion, with enterprise revenue now accounting for 59% of total sales, according to a a CNBC report. This shift, coupled with a 6% YoY increase in enterprise revenue, signals maturation beyond its pandemic-era consumer-centric model. The company's rebranding to Zoom Communications Inc. and its focus on AI innovations-such as the upcoming Custom AI Companion-position it as a platform for hybrid work environments, as detailed in its Q3 earnings report.

However, Zoom's valuation remains a point of contention. While its full-year 2025 revenue guidance of $4.66 billion implies a 10% growth rate, this pales compared to its pre-pandemic hypergrowth. Analysts at JMP Securities note that the stock's 2025 forward P/E of 22x reflects a discount to its 2023 peak of 35x, a point highlighted in the CNBC report. For long-term investors, the key question is whether Zoom's AI investments and enterprise focus can reaccelerate growth to justify a premium multiple.

Dropbox: Profitability vs. Stagnant Revenue

Dropbox's financials highlight a stark contrast: robust profitability but weak revenue growth. The company reported $2.5 billion in trailing 12-month revenue, with a 30.48% EBITDA margin and a forward P/E of 10.22, making it one of the most attractively valued cloud stocks, according to Stock Analysis. Free cash flow of $892.8 million and a debt-to-EBITDA ratio of 3.71 further underscore its financial discipline, as noted by Stock Analysis.

Yet, Dropbox's five-year revenue growth forecast of -1.01% raises red flags. Despite a 15.69% EPS growth outlook, the company's reliance on its core file-storage business-now facing competition from AI-native tools-limits upside potential. A report by Bloomberg Intelligence notes that Dropbox's market share in the cloud storage segment has declined 12% since 2022, as users migrate to integrated productivity platforms. For Dropbox, the challenge is whether its recent forays into AI-powered collaboration tools can reinvigorate growth without cannibalizing its existing user base.

Commvault: Subscription Growth and Cyber Resilience

Commvault's Q4 FY2025 results exemplify the power of a subscription-based model. Revenue surged 23% YoY to $275 million, with subscription revenue growing 45% to $173 million, according to Commvault's Q4 results. The release also reported non-GAAP EBIT of $59 million and a 21.5% operating margin, while guidance for 2026 of $1.13–1.14 billion implies a compound annual growth rate (CAGR) of 13–14%.

Analysts at Cowen & Co. emphasize that Commvault's focus on cyber resilience-a $12 billion market by 2027-positions it to capitalize on rising data security demands. Its recent product innovations, including AI-driven data governance tools, align with enterprise priorities. However, the stock's current valuation (forward P/E of ~18x) appears stretched relative to its growth rate, particularly when compared to Dropbox's cheaper multiples. This raises the question: Is Commvault's premium justified by its high-margin, recurring revenue model, or is it overvalued in a sector facing broader skepticism?

Valuation Correction vs. Long-Term Potential

The three companies present distinct risk-reward profiles. Zoom's valuation correction appears moderate, with its forward P/E and enterprise value-to-revenue ratio (1.2x) reflecting a balance between growth and profitability. Dropbox, meanwhile, offers a compelling value play, with its low P/E and EV/EBITDA metrics suggesting undervaluation if its revenue stagnation is temporary. Commvault's premium valuation demands confidence in its ability to sustain high-margin growth in a competitive market.

For investors, the decision hinges on time horizon and risk tolerance. Dropbox's profitability and low valuation make it a defensive bet, while Commvault's subscription momentum and cyber resilience focus appeal to growth-oriented investors. Zoom occupies a middle ground, with its enterprise transition and AI roadmap offering potential for a re-rating if execution meets expectations.

Conclusion

The cloud software sector's current turbulence has created opportunities for selective investors. Zoom's enterprise pivot and AI bets, Dropbox's profitability at a discount to peers, and Commvault's subscription-driven growth each warrant closer scrutiny. While valuation corrections are evident, the long-term winners will be those that align with macro trends-such as AI integration and cyber resilience-and demonstrate sustainable innovation.