Zoom Communications (ZM) saw a surge in user base and revenue during the pandemic, driving its stock price to a premium level. The stock has since fallen to an attractive discount. Morningstar expects continued expansion and retention of customers gained during the pandemic.

Zoom has disrupted the collaboration software market with its user-friendly experience. The company’s approach of combining e-commerce and direct sales has led to strong growth and potential to penetrate large enterprise accounts.

Morningstar assigns a narrow moat rating to Zoom due to switching costs and network effects. The company’s rapid scaling and product portfolio expansion position it for competitive advantage and excess returns on capital over the next decade.

The fair value estimate for Zoom stock is $92, with a projected growth rate of 3% through 2030. Revenue is expected to shift towards existing customers, with new solutions like Zoom Phone and Zoom Contact Center driving growth over the next decade.

Zoom faces risks from revenue concentration among large customers and competition from tech giants like Microsoft and Cisco. Smaller customers with higher churn pose a challenge, but Zoom’s disruptive technology and strong margins are key strengths.

Bulls believe Zoom’s user base growth will continue, driven by satisfied customers and disruptive technology. Bears point to execution risks, competition from industry giants, and uncertainty about accelerating revenue post-pandemic.

This analysis was compiled by Susan Dziubinski and Sylvia Hauser, with data as of July 23, 2025. The authors do not own shares in any securities mentioned in the article. Read more about Zoom’s moat rating, fair value estimate, and risk factors on Morningstar’s website.

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