Zoom Focuses on AI to Drive Growth. Will It Work?
Back when we focused more on the tech startup scene, there was a time when it seemed like every other article was about artificial intelligence and machine learning. We eagerly mined the annual CB Insights reports on the top AI companies and produced countless listicles about everything from AI healthcare startups to AI startups in Hungary. One of those articles was about natural language processing companies using a large language model called GPT-3 for things like writing Tinder bios.
This was back in March 2021, well before OpenAI’s big breakout with ChatGPT at the end of 2022. However, the company was already valued at between $14 billion and $20 billion by then after attracting some big venture capital bucks, as well as the attention of a little software company called Microsoft. After recently raising $6.6 billion, the Sam Altman-led, soon-to-be-for-profit company now sports a valuation of $157 billion.
Zoom Stock Headed the Wrong Way
Meanwhile, an AI-adjacent company like Zoom (ZM) has been doing a financial Benjamin Button impersonation. After hitting a market cap of $139 billion at the height of pandemic hype, Zoom now sports a valuation of about $22 billion, with shares trading under $70, as of mid-October 2024. A couple of years ago, there was talk by a certain tech-focused investment firm that the pandemic darling would hit $1,500 a share by 2026. In a video follow-up to that article this past summer, we calculated that shares of Zoom stock would need to go up more than 2,500% to reach that estimate. The only (quality) company (with legitimate history) in recent memory to post that kind of growth (and over a five-year period) is NVIDIA (NVDA).
Keep in mind the expectations that were in play for Zoom stock during the pandemic. When your company name becomes a verb synonymous with its core business model – “let me google that for you” – the assumption is that said company has become not just successful but indispensable. Zoom became synonymous with video conferencing – “let’s zoom” – and those sophisticated financial models subconsciously baked in these sorts of intangibles even if the math does not explicitly reflect that.
Our video described the problems with the ARK Invest model in depth, so no reason to rehash it all here. What we do want to do in this article is determine if there are still enough reasons to like Zoom stock based on more reasonable expectations.
Zoom Among UCaaS Leaders
Let’s start with revenue growth, which was just 3% from 2023 to 2024. In the company’s recent Q2-2025 earnings report, revenue growth was only 2%, though sales to larger customers ($100K+) over the last 12 months were up 7%. On the other hand, the company is still struggling to convince customers to spend more on its platform, as reflected in a 98% net dollar expansion rate (also known as a net revenue retention rate).
This seems particularly problematic since Zoom has positioned itself as a one-stop shop for enterprise communication needs, challenging the perception that it’s solely a video meeting platform. This expanded platform includes phone and chat services, virtual event and webinar capabilities, and most recently, a Contact Center solution for customer relations management. These integrated services fall under the umbrella of unified communications (UC), a concept that encompasses how businesses streamline and consolidate their internal and external communication channels. By all accounts (well, Gartner), Zoom is a leader in UC as a service (UCaaS).
You might recognize a few other names on Gartner’s Magic Quadrant for UCaaS. Both Microsoft Teams and Cisco Webex are slightly ahead of Zoom, while Google Meet (unsurprisingly and fittingly) trails well behind. In its specific analysis, Gartner noted that while Zoom remains cost competitive in its market, its customers are getting fewer incentives and promotions, which might affect long-term brand loyalty. Indeed, growth in Zoom’s customer base has slowed significantly over the past 12 to 18 months, partly due to a consolidating UCaaS market, according to Gartner. Finally, Gartner argues that while Zoom’s licensing model encourages the purchase of the entire Zoom Workplace UCaaS offering, many clients opt for competing vendors for collaboration or contact center solutions, which may help explain the poor net dollar expansion rate.
Dialing Up Contact Center Revenue
Let’s zoom in on one specific solution where the company has been working to build its market share. We recently did a deep dive into how AI is upending the call center industry, with a company called NICE (NICE) being a key player in the space, expecting 15% revenue growth this year. Total addressable market (TAM) for contact center tech is projected to explode from $8 billion today to $22 billion by 2028, according to NICE, as AI sends more people to the unemployment line frees workers for value-added tasks. Zoom projects a similar TAM of about $24 million in four years.
A quick reminder: Where call centers are focused mainly on keeping customers on interminable hold while listening to soul-numbing muzak as their brains are being irradiated by 5G, contact centers handle multiple communication channels including phone, email, chat, social media, etc. Contact centers are also more about the customer experience, and they leverage advanced technologies like AI, automation, and analytics.
In contrast to the Gartner analysis, Zoom appears to be making significant progress in its Contact Center offering. In Q2-2025, Zoom closed its largest ever Contact Center deal (with no further detail provided) and surpassed 1,100 customers, representing over 100% year-over-year growth. Management claims the company is winning competitive displacements, with all of its top 10 Contact Center wins representing displacements of major vendors, including 40% migrations from first-generation cloud-based solutions. The C-suite says it’s winning business by offering competitive pricing and seamlessly integrating its call center solution with other Zoom products. The introduction of new pricing tiers, including advanced AI features, has also led to higher average selling prices.
AI to the Rescue?
That brings us back to everyone’s favorite topic: AI. Like other companies we’ve recently profiled, such as Intapp and its software platform for high-end financial services firms, Zoom is positioning itself as an AI first-slash-everything organization.
The company reported that Zoom AI Companion is now enabled on more than 1.2 million accounts. While Zoom is not (yet) directly monetizing AI Companion for core offerings, it is using these features to drive customer retention, enhance platform stickiness, and differentiate from competitors. As we noted earlier, for premium services like Contact Center, Zoom is cashing in on AI capabilities through higher-tier pricing, with management reporting that average selling prices nearly doubled quarter-over-quarter due to AI tools such as automatic engagement and disposition, wrap-up notes, and next-action suggestions. AI features such as meeting summaries, action item generation, and language translation are being incorporated into other core offerings like Meetings, Phone, and Team Chat.
Earlier this month, Zoom introduced a bevy of new AI products at its Zoomtopia event. The centerpiece was AI Companion 2.0, an upgraded version of its AI assistant that can pull information from various sources including Microsoft and Google services, among other features. For Zoom Contact Center, the company introduced enhancements to the virtual agent, including multi-intent detection and an AI virtual voice agent. Zoom also rolled out industry-specific add-on solutions for a fee, such as Zoom Workplace for Healthcare that provides access to third-party data sources like electronic healthcare records.
In a recent three-month period, there was a 40% increase in active users of AI Companion, and nearly 57% of Fortune 500 companies have the feature enabled. Time will tell if these AI tools will boost net dollar expansion rate and improve platform stickiness, especially among enterprise customers.
It all comes down to one thing. We need to see revenue growth that reflects all the grand things Zoom claims to be doing around AI and Contact Centers. Regarding the latter, Genesys -the leader in Contact Centers as a Service or CCaaS according to Gartner – just filed for an IPO. NICE expects 15% revenue growth this year compared to Zoom’s expected 2.4% growth. It’s hard to like a “disruptive growth” company that’s only growing in the low single digits.
Conclusion
The biggest question, of course, is whether the pandemic darling can return to its brief glory days of significant revenue growth. We already know that’s not happening in the near term, with Zoom predicting less than a 3% uptick in revenue for 2025. It’s also hard to see it happen over a longer time horizon. The mass adoption that the company enjoyed during the pandemic – and the associated revenue growth – is not an event that is easily repeated. It did enable Zoom to scale its platform and successfully compete against some of the world’s biggest tech companies. But now revenue growth will come from the tit-for-tat of attracting and losing customers over new products and services – a trench warfare as interminable as being on hold with a call center. At least we’ll have time to work on our Tinder bios.
