Few stocks better symbolized the impact of Covid on businesses around the world than Zoom Communications (ZM). After going public in April of 2019, Zoom stock began its sharp ascent when the pandemic hit in early 2020.
Covid forced a massive shift to working from home and social distancing, sparking huge demand for Zoom’s teleconferencing technology.
After shares peaked in October of 2020, however, Zoom went into a tailspin, enduring a severe, multiyear decline. But since bottoming out and launching a new breakout in October, Zoom stock aims to extend its budding rebound as it earns a spot on the IBD Breakout Stocks Index.
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Zoom Evolves Workspace With AI Companion 2.0
In October, Zoom unveiled AI Companion 2.0, the next generation of the company’s artificial intelligence assistant. The enhanced features and capabilities aim to expand context, synthesize information across the Zoom Workspace platform, and take action to save time and build connections with team members.
During a meeting, AI Companion 2.0 can answer user questions like “What is the discussion about?” or “Were action items assigned to me?”
After a meeting, the AI assistant can provide a recap of outcomes, as well as summaries of both sides of a disagreement.
See All Names On The IBD Breakout Stocks Index
Zoom Stock In Demand But Not Out Of The Woods
As Zoom continues its shift to an AI-first work platform, financial growth remains in the low single digits. Over the last eight quarters, the company has posted revenue growth between 2% and 4%. In its latest report for the October-ended quarter, the San Jose, Calif.-based firm generated a 4% gain to just under $1.18 billion.
It posted earnings of $1.38 per share, a 7% year-over-year gain. For the full fiscal year, analysts forecast a 4% increase in earnings to $5.44 a share.
In a sign of quality institutional demand, 76 funds with an A+ rating from IBD have a position in Zoom stock. Plus, it sports an A- Accumulation/Distribution Rating, a 1.6 up/down volume ratio and three quarters of rising fund ownership.
Boosted by that demand, Zoom stock has crafted a second-stage flat base. The buy point is 92.80.
As it forms that base, Zoom closed out the year by holding support at its 10-week moving average. Its relative strength line has been on the upswing, but has moved sideways as the flat base has formed.
As Zoom stock looks to build on its budding rebound, see if it can hold support and the RS line can move toward a 52-week high.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF (BOUT) from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index in addition to, or rather than, buying individual stocks. Learn more here about the ETF and Innovator.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
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