Zoom Communications upgraded to Strong Buy on strong financials and growth potential from AI and Anthropic IPO.

Zoom Communications received a Strong Buy upgrade due to its solid financial performance, including 5.5% revenue growth in Q1 FY27 and a 40.4% free cash flow margin. The company has repurchased $1.56 billion in shares over the past year and recently authorized another $1 billion buyback. With a strong balance sheet holding $7.72 billion in net cash, Zoom is well-positioned to invest in innovation, expand internationally, and benefit from its undervalued stake in Anthropic ahead of a potential IPO. The stock's valuation offers a margin of safety, with a discounted cash flow fair value of $94.21 per share, excluding potential gains from the Anthropic IPO.