Zoom: Buying Before The Market Prices In The Anthropic Stake (Upgrade)

Zoom Communications is upgraded to Strong Buy, driven by robust financials, expanding AI initiatives, and an undervalued Anthropic stake as its potential IPO approaches. Q1 FY27 saw 5.5% revenue growth, a 40.4% FCF margin, and $1.56B in buybacks over 12 months, with another $1 billion buyback authorization announced recently. ZM's balance sheet remains a fortress with $7.72B in net cash, supporting continued innovation, investments, and international expansion. Valuation implies a solid margin of safety, with DCF-derived fair value at $94.21/share, excluding potential Anthropic IPO upside. Introduction The first time I covered Zoom Communications (ZM), highlighting the company's exceptional financial position and significant expansion potential into a diversified work platform, as well as a small Anthropic stake.