Zoom’s AI-Powered Resilience: A Defensive Growth Play for Uncertain Times

In an era of economic uncertainty, Zoom Video Communications (ZM) is proving that defensive growth stocks aren’t limited to utilities or consumer staples. By embedding AI into its core collaboration platform, Zoom is transforming hybrid work into a high-margin, sticky revenue stream—and its Q1 2025 results underscore its staying power. With AI-driven efficiency fueling customer retention and enterprise demand, Zoom’s strategic pivot positions it as a rare blend of stability and scalability. Here’s why investors should act now.

The AI Efficiency Play: Why Hybrid Work Needs Zoom

Zoom’s AI innovations aren’t just bells and whistles—they’re the backbone of its hybrid work solutions. In Q1, monthly active users for AI features surged 40% year-over-year, with over 700,000 customer accounts now leveraging its AI Companion. This tool, which automates tasks like scheduling, meeting summaries, and customer service workflows, is directly tied to enterprise growth. For example, Expedia uses AI-powered Revenue Accelerator to streamline bookings, while MLB deployed AI-driven Contact Center tools to enhance fan engagement.

The result? Enterprise revenue rose 6% to $705 million, outpacing the 3% total revenue growth. AI isn’t just additive—it’s reshaping Zoom’s value proposition. Companies aren’t just buying video calls anymore; they’re investing in AI systems that reduce costs, boost productivity, and future-proof workflows.

Defensive Metrics in an Offense-Laden World

While macroeconomic headwinds pressured smaller businesses (online revenue dipped 1.2%), Zoom’s focus on high-value enterprise clients insulated its margins. Non-GAAP operating margins expanded to 39.8%, reflecting disciplined cost management. Crucially, customer churn dropped to 2.8%—a 40-basis-point improvement—as AI-driven features create stickier relationships.

Zoom’s balance sheet further bolsters its defensive profile. With $7.8 billion in cash and equivalents, it’s executing a shareholder-friendly strategy:
- $418 million in Q1 share buybacks (total remaining authorization: $1.2B)
- Raised FY26 revenue guidance to $4.80–4.81 billion, up from prior forecasts

The AI Flywheel: Growth Ahead

Zoom’s AI-first platform isn’t just about today’s metrics—it’s building a compounding advantage. New products like Custom AI Companion (for tailored workflows) and Workplace for Clinicians (healthcare-specific tools) are monetizing AI at scale. Meanwhile, partnerships with Meta and Mitel expand its ecosystem, attracting new customers through hybrid workplace solutions.

The $470 million in free cash flow, while down from prior years due to buybacks and AI investments, still leaves ample room to fund innovation. Zoom’s $100k+ enterprise customers grew 8% to 4,192, a cohort generating 32% of revenue—a testament to AI’s ability to upsell and cross-sell.

Why Act Now?

Zoom’s Q1 results and AI strategy answer the critical question for defensive investors: How does a growth stock thrive in a slowdown? The answer lies in operational leverage and customer stickiness—both of which Zoom is delivering.

• Valuation Check: At 19x forward non-GAAP EPS, Zoom trades at a discount to peers like Microsoft (cloud) or Slack (collaboration), yet its AI-driven margin expansion is unique.
• Catalysts Ahead: Upcoming AI features like “Ask AI Companion” (integrating across chat, meetings, and workflows) could supercharge multi-product adoption.

The Bottom Line

Zoom isn’t just surviving the post-pandemic world—it’s redefining it. Its AI integration isn’t a side project; it’s the engine of its enterprise growth, margin resilience, and customer loyalty. With shares down 20% from their 2023 highs but fundamentals strengthening, this is a rare moment to buy a high-growth stock at a value price. For investors seeking both safety and upside in 2025, Zoom’s AI-powered hybrid work platform is a no-brainer.

Act now—before the market catches up to Zoom’s AI advantage.