Zoom (ZM) Q2 Earnings: Is the AI-Driven Growth Justifying the Hold Rating?

In the ever-evolving landscape of enterprise software, Zoom Communications (ZM) has emerged as a standout player, leveraging artificial intelligence to redefine collaboration. However, despite its recent Q2 2025 earnings outperformance and a surge in AI-driven product innovation, the stock remains under a Zacks Rank #3 (Hold). This article evaluates whether Zoom's AI-led momentum can sustain its earnings trajectory and justify a reevaluation of its market positioning.

Earnings Momentum: A Tale of Outperformance

Zoom's Q2 2025 results were nothing short of impressive. The company reported earnings per share (EPS) of $1.53, surpassing the Zacks Consensus Estimate of $1.37 by 11.68%. Revenue hit $1.22 billion, a 1.66% beat over estimates and a 4.7% year-over-year increase. This marks four consecutive quarters of earnings and revenue outperformance, a testament to Zoom's ability to adapt in a competitive market.

Yet, the Zacks Rank #3 (Hold) persists. The rating reflects mixed earnings estimate revisions, with a recent 1.1% downward adjustment in the consensus EPS forecast over 30 days. While this tweak is modest, it underscores lingering skepticism among analysts about the sustainability of Zoom's growth. Investors must ask: Is the market underestimating Zoom's AI-driven transformation, or are there structural headwinds that warrant caution?

AI as the Growth Engine: Innovation Meets Execution

Zoom's AI-first strategy has been a cornerstone of its 2025 success. The AI Companion platform, now deployed in enterprise settings with 60,000+ users at a Fortune 200 company, exemplifies this shift. Features like pre- and post-meeting automation, integration with Zoom Phone and Docs, and agentic AI capabilities have positioned the platform as a differentiator in the Unified Communications as a Service (UCaaS) market.

The company's R&D investments are paying off. Zoom's federated AI architecture, combining small language models with third-party large language models, balances cost efficiency with performance. Virtual Agent 2.0, now adopted by major enterprises, further enhances customer experience automation. These innovations are not just incremental—they are redefining how businesses collaborate, with Zoom capturing a growing share of the AI-driven UCaaS pie.

Analyst sentiment aligns with this optimism. Jefferies, Evercore ISI, and Wedbush have all assigned “Buy” or “Outperform” ratings, with a median price target of $90.50. Institutional investors, including BlackRock and Norges Bank, have increased holdings in ZM, signaling broader confidence in its long-term thesis.

The Hold Rating Conundrum: Earnings vs. Market Dynamics

The Zacks Rank #3 (Hold) suggests that Zoom's performance is expected to mirror the broader market in the near term. This is partly due to the company's underperformance relative to the S&P 500, which it has trailed by 11.6% year-to-date. While earnings momentum is robust, the market may be factoring in risks such as competitive pressures from Microsoft Teams and Slack, as well as macroeconomic uncertainties.

However, Zoom's financials tell a different story. Non-GAAP gross margins hit 79.8%, and operating income grew by 10.5% to $503 million in Q2. The company raised its 2026 revenue guidance to $4.825–$4.835 billion, reflecting confidence in scaling its AI strategy. These metrics suggest a business that is not only surviving but thriving in a challenging environment.

Investment Implications: Balancing Caution and Opportunity

For investors, the key question is whether the Hold rating accurately reflects Zoom's long-term potential. The company's AI-driven innovations and strong execution provide a compelling case for growth. However, the mixed earnings estimate revisions and underperformance against the S&P 500 highlight the need for caution.

A strategic approach might involve monitoring key metrics:
1. Earnings Estimate Revisions: A sustained upward trend in EPS estimates could signal a shift in analyst sentiment.
2. AI Adoption Rates: Continued enterprise adoption of AI Companion and Virtual Agent 2.0 will validate the scalability of Zoom's strategy.
3. Competitive Positioning: Assessing how Zoom differentiates itself from rivals in the UCaaS space will be critical.

In the short term, the Hold rating suggests a wait-and-watch stance. However, for long-term investors, Zoom's AI-led transformation and financial discipline present a compelling opportunity. The company's recognition as one of Fast Company's Most Innovative Companies in 2025—joining peers like Nvidia and Waymo—reinforces its position at the forefront of AI innovation.

Conclusion

Zoom's Q2 earnings and AI-driven product suite demonstrate a company in motion. While the Zacks Rank #3 (Hold) reflects current market dynamics, the underlying fundamentals and strategic execution suggest a stronger long-term narrative. Investors who can look beyond near-term volatility may find value in a business poised to capitalize on the AI revolution in enterprise collaboration. As with any investment, patience and a focus on execution will be key to unlocking Zoom's full potential.