Is Zoom Video Communications (ZM) a Strong Buy in 2026 Amid Post-Pandemic Challenges?

The post-pandemic era has reshaped the global economy, leaving many technology stocks grappling with the transition from crisis-driven demand to a more normalized growth environment. Zoom Video Communications (ZM), once a pandemic-era darling, now faces the dual challenge of sustaining its momentum in a maturing market while navigating broader macroeconomic uncertainties. However, a closer examination of its fundamentals-bolished by a Zacks Rank #1 (Strong Buy) rating, improving earnings estimates, and a valuation discount relative to the broader market-suggests that ZM could offer compelling long-term value for investors willing to look beyond short-term volatility.

Earnings Momentum and Analyst Optimism

Zoom's recent financial performance has demonstrated resilience. For Q4 2025, the company reported adjusted earnings per share of $1.41, exceeding the Zacks Consensus Estimate. This outperformance has spurred upward revisions to earnings forecasts, with the consensus estimate for the current quarter rising by 10.37% since the third-quarter report. Analysts have further raised their full-year 2026 guidance, projecting non-GAAP EPS in the range of $5.95 to $5.97. Such revisions reflect confidence in Zoom's ability to adapt to shifting demand dynamics, particularly as enterprises continue to prioritize hybrid work solutions.

The company's revenue growth, while modest compared to its pandemic-era highs, remains stable. A 4.4% year-over-year revenue increase in Q3 2026 underscores its capacity to maintain market share in a competitive SaaS landscape. This stability is critical in an environment where many tech firms are experiencing decelerating growth.

Valuation Discount and Strategic Positioning

Zoom's valuation metrics further strengthen its case as a potential high-conviction play. As of early 2026, the stock trades at a forward P/E ratio of 14.48, significantly below the 24.2 average for its industry. This discount reflects investor caution about its growth trajectory but also presents an opportunity for those who recognize its long-term potential. The PEG ratio of 5.04, while elevated, accounts for its modest earnings growth expectations, suggesting that the market may be underestimating its ability to innovate and expand into adjacent markets.

In contrast, the broader S&P 500 trades at a forward P/E of 22.2, a level that exceeds both its 5-year (20.0) and 10-year (18.7) averages. This premium valuation, driven by optimism around AI-driven productivity and macroeconomic stability, highlights the risks of overvaluation in large-cap tech stocks. Zoom's relatively conservative multiples position it as a counterbalance to the broader market's exuberance, offering a more balanced risk-reward profile.

Post-Pandemic Consolidation and Competitive Resilience

The post-pandemic period has seen a wave of consolidation in the video communications sector, with smaller players struggling to keep pace with evolving customer needs. Zoom, however, has leveraged its first-mover advantage and robust product ecosystem to maintain a dominant position. Its ability to exceed earnings estimates by 6.29% in Q3 2026 demonstrates operational discipline, even as competition intensifies.

While its revenue growth has slowed compared to pre-pandemic levels, this reflects a maturing market rather than a decline in competitive strength. The company's focus on enterprise solutions and international expansion-key drivers of long-term value-positions it to benefit from structural trends in hybrid work adoption.

Strategic Entry Point Amid Macro Risks

The broader market's overvaluation, particularly in the tech sector, introduces systemic risks. The S&P 500's forward P/E of 22.2 and the software industry's average P/E of 97.61 suggest that investors are paying a premium for future earnings, which may not materialize as expected. In this context, Zoom's undervalued multiples and improving fundamentals make it an attractive candidate for strategic entry.

However, investors must remain mindful of near-term challenges, including rising default probabilities and the need for continued innovation to defend its market share. These risks are not insurmountable but require a disciplined approach to capital allocation and operational efficiency.

Conclusion

Zoom Video Communications stands at a crossroads in 2026. While the post-pandemic environment has tempered its growth trajectory, its strong earnings momentum, analyst optimism, and valuation discount relative to the broader market present a compelling case for long-term investors. By leveraging its position as a consolidator in the video communications space and capitalizing on structural trends in hybrid work, ZM could deliver outsized returns for those willing to navigate the near-term uncertainties. In a world where overvaluation looms large, Zoom's fundamentals offer a rare combination of resilience and value-a hallmark of high-conviction investing.