Bank of America is getting bullish on Zoom Communications again as the software company pushes deeper into phone, contact center, and artificial intelligence products after years of post-pandemic normalization.
Zoom Communications (ZM) was reinstated at Buy by BofA analyst Matt Bullock, who set a $130 price objective that implies roughly 24% upside from the $104.71 price used in the firm’s research.
In a note given to TheStreet, Bullock said Zoom’s setup for sustainable growth has become “much more attractive” as enterprise spending improves and newer products begin to carry more of the load.
BofA sees Zoom moving beyond meetings
Zoom became one of the defining software winners of the pandemic, but the reopening economy left the company dealing with contract reductions, a mature meetings market, and growing competition from Microsoft Teams.
That reset is beginning to ease. Zoom reported fiscal first-quarter 2027 revenue of $1.24 billion, up 5.5% from a year earlier, while enterprise revenue grew 7.2%. Constant-currency revenue growth reached 4.6%, continuing a broader acceleration from the company’s post-pandemic lows.
BofA expects Zoom’s newer products to help push growth into the mid-single-digit range. Zoom Phone has surpassed 10 million paid seats, while Contact Center has crossed $100 million in annual recurring revenue, according to the note.
The analyst also expects enterprise net dollar expansion, which improved to 99% in the latest quarter, to climb above 100% as customers add Phone, Contact Center, Workvivo, and AI products.
Microsoft remains the biggest competitive threat. BofA argues the most significant wave of customers consolidating onto Teams has largely played out, leaving Zoom with a more durable base and more opportunities to coexist alongside Microsoft’s platform.
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Zoom has a multibillion-dollar asset hiding in plain sight
BofA’s bull case also includes an asset investors may not normally associate with Zoom: a sizable investment in Anthropic.
Zoom disclosed in its fiscal first-quarter 10-Q that it invested another $46 million in Anthropic preferred stock during the quarter, bringing the carrying value of that position to $1.27 billion as of April 30. The company had $1.88 billion in total strategic investments at quarter-end.
That accounting value may significantly understate what BofA thinks the stake is worth today.
Anthropic raised $65 billion in a Series H financing in May at a $965 billion post-money valuation, up sharply from the valuation used to determine Zoom’s disclosed carrying value.
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Using that valuation and adjusting for dilution, BofA estimates Zoom owns roughly 0.311% of Anthropic, putting the stake’s estimated value near $3 billion.
BofA incorporates that estimate directly into its $130 price target. The firm values Zoom’s core communications business using a 14.7 times calendar-year 2027 enterprise value-to-free-cash-flow multiple, then adds the estimated value of the Anthropic stake.
The bank estimates Zoom trades around 13 times 2027 EV/free cash flow before accounting for Anthropic. Stripping out the estimated $3 billion value of the investment lowers the implied valuation on the core business to about 11 times, strengthening BofA’s argument that the shares remain inexpensive.
Zoom still has risks to work through
The bull case depends on Zoom proving its newer products can offset pressure in its mature meetings business.
BofA highlighted Microsoft bundling, enterprise down-sells, online customer churn, and slower-than-expected adoption of new products as major risks. Contact Center also faces entrenched competitors, while Zoom still has to prove that growing AI usage can translate into meaningful paid revenue.
Zoom has financial room to pursue that strategy. The company ended April with roughly $7.7 billion in cash, cash equivalents, and marketable securities, and generated $521.6 million in operating cash flow during the quarter.
BofA sees improving operating trends as enough to support its Buy rating after Zoom spent years working through its post-pandemic reset. The estimated value of its Anthropic investment gives the bull case another catalyst investors may have overlooked.
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