Why 1 Analyst Thinks Zoom Stock Is Set to Be an Unexpected AI Winner

Zoom (ZM) is among the top technology companies investors sought to gain exposure to during the pandemic. When everyone was forced to work from home, Zoom’s video conferencing platform saw absolutely incredible demand.

Now, since the pandemic, Zoom has been able to keep an impressive number of companies and individuals that signed up for its services. This has meant that the kind of cash flow deterioration many expected hasn’t materialized, with the company able to reinvest in its offerings and provide even more value to its end customers.

In addition to this reality, Zoom has also seen a bump in investor interest (and its stock price, shown above). And with some analysts now jumping aboard Zoom as a top investment opportunity, with Baird analysts commenting on Zoom’s stake in AI darling Anthropic this past week, perhaps this is the growth stock investors are looking for.

Let’s dive into what to make of this recent analyst note, and why Zoom looks more attractive than it has in some time.

Again, I’ve been of the view that Zoom’s impressive rise in terms of its revenue and earnings/cash flow growth isn’t a one-off pandemic success. Many in the markets appear to agree with this view, with ZM stock performing well in recent weeks.

However, the sharp uptick investors benefited from this past week (though this move was later accompanied by some selling pressure thanks to macro concerns) is notable. This move suggests to me that Baird analyst William Power is onto something, with his view that Zoom’s $51 million investment in Anthropic could be the game-changing move investors want to see.

Fundamentally, Zoom does appear to have both the cash flow and balance sheet capacity to support such investments. Indeed, many market participants are clamoring for companies like Zoom with excess balance sheet capacity to put this capital to work in investments that can grow as fast as possible. For some companies, that may mean reinvesting in their core business. For others, it may mean taking a slice out of other larger, higher-growth AI stocks.