Hook & thesis
Buy Zoom (ZM) at the market and use that position as the conservative leg of a two-part trade that seeks asymmetric upside from Anthropic before its public listing. Zoom is an established enterprise communications platform generating roughly $2.0 billion in free cash flow and trading at a market cap of about $27.3 billion. That gives you a profitable, cash-generative equity with reasonable valuation while you look for pre-IPO Anthropic exposure on the side via authorized secondaries, allocations through venture funds, or private-market brokers where available.
Why this pairing? Zoom offers defensive earnings quality, improving technical momentum and valuation metrics that aren't demanding for a profitable tech name. Anthropic, by contrast, is a high-upside generative-AI pure play; pre-IPO stakes can be extremely volatile but offer non-linear upside if the public valuation re-rates. Combining the two lets an investor retain a core position that pays off if AI-driven enterprise adoption lags, while keeping optional upside if Anthropic becomes a public market darling.
What Zoom does and why the market should care
Zoom operates a communications and collaboration platform across video, voice, chat and rooms. The product remains entrenched across large enterprises and SMBs, and the company is positioned to monetize AI-driven productivity features inside meetings and contact centers. The market cares because Zoom has moved beyond the pandemic-growth narrative into an operating model that produces scale economics, steady margins and sizable free cash flow.
Numbers that matter
- Market cap: approximately $27.27 billion.
- Earnings per share: $5.38 (latest reported).
- Price-to-earnings: ~17.1 - 17.9 depending on the snapshot used; the trailing multiples imply a reasonable entry point for a profitable software franchise.
- Free cash flow: roughly $2.00 billion; price-to-free-cash-flow of ~13.6, implying an FCF yield in the neighborhood of 7.3%.
- Return on equity: ~17.2% and return on assets ~14.0% - respectable profitability metrics for a scaled software business.
- Balance sheet/cash: current and quick ratios noted at ~4.45, and enterprise value near $26.06 billion.
Put bluntly: Zoom generates real cash, has durable margins and trades at a multiple that leaves room for multiple expansion if AI monetization accelerates or share buybacks/policy tailwinds improve investor sentiment.
Technical and market microstructure support
Momentum looks constructive: the stock is above its 10-, 20- and 50-day moving averages (10-day ~ $88.47, 20-day ~ $86.60, 50-day ~ $86.27) and the 9-day EMA sits near $90.46. RSI at ~59.5 is healthy without being overbought, and MACD shows bullish momentum. Short interest is modest, with days-to-cover generally around two trading days in recent reads. Liquidity is adequate — two-week average volume is roughly 4.2 million shares, with 30-day average near 3.2M.
Valuation framing
At a market cap near $27.3 billion and free cash flow of about $2.0 billion, Zoom trades around a 13.6x price-to-free-cash-flow and roughly 17x earnings. Those multiples are not cheap, but they’re reasonable for a profitable, high-margin SaaS business with scale defensibility. If you view Zoom as a rolling cash-generative platform that can incrementally upsell AI features to existing customers, the current valuation gives upside to multiple expansion without requiring blockbuster top-line growth.
Qualitatively, the market is valuing Zoom as a mature enterprise software franchise rather than a high-growth, hyper-expensive AI pure play. That makes Zoom a sensible core holding during a period of uncertain AI winners — you capture a baseline of cash generation while retaining optionality to add higher-beta AI exposure on the side.
Catalysts (what will move the trade)
- AI monetization announcements and product integrations that clearly show ARR uplift or higher ARPU per enterprise account.
- New voice and contact-center partnerships that expand revenue per seat - recent partner activity in the industry (e.g., operator and room hardware innovations) helps the distribution moat.
- Macro tailwinds such as a pivot to easier Fed policy that lifts tech multiples across the board.
- Any company disclosure of strategic investments or partnerships with leading AI infrastructure or model providers that signal differentiated access to generative models.
- Execution on cost discipline and share repurchases that convert revenue into higher free cash flow per share.
The Anthropic angle - how and why to add pre-IPO exposure
Anthropic sits on the other end of risk: low near-term cash visibility but very high upside if its public valuation proves the market's appetite for leading model makers. The idea here is not to replace your core portfolio with Anthropic, but to selectively gain pre-IPO exposure alongside a conservative Zoom position.
Practically this means one of three paths, depending on your investor status and access:
- Authorized secondary marketplaces or brokers that handle pre-IPO shares (suitable for accredited investors and institutions).
- Allocations through venture funds or crossover funds that are taking Anthropic positions ahead of an IPO.
- Allocating a small fraction of your portfolio to private-market exposure via platforms that list pre-IPO rounds (where allowed).
Keep the Anthropic allocation modest relative to your Zoom leg. Think of it as buying optionality: a small, illiquid bet that can multiply if Anthropic’s public debut re-rates the sector.
Trade plan - actionable rules
Primary leg (Zoom long):
- Entry price: 92.11
- Stop loss: 84.00
- Target price: 120.00
- Time horizon: long term (180 trading days) - hold to allow AI monetization and multiple expansion to materialize. Reassess at major earnings or product announcements.
Rationale: Entry at $92.11 buys into a profitable company trading below 14x free-cash-flow and roughly 17x earnings, with modest technical momentum. The stop at $84 limits downside to critical support near the recent moving-average cluster. The $120 target prices in multiple expansion toward the low-20s on P/E/FCF if AI features start to lift ARPU and investors re-rate the growth narrative.
Secondary leg (Anthropic pre-IPO exposure):
- Allocation: no more than 5% of total portfolio value, and preferably less if liquidity needs exist.
- Access route: authorized secondaries, fund allocations, or private-market platforms for accredited investors. Expect lockups and limited liquidity.
- Time horizon: mid-to-long term (45 to 180 trading days) depending on IPO timing; be prepared to carry through the public listing or sell if private-market pricing becomes unattractive.
Position sizing and mechanics
Size the Zoom core position to cover your baseline tech exposure (for many retail investors this could be 1-3% of portfolio for a starter buy). Use the Anthropic leg as a tactical allocation (target 1-5% depending on risk appetite). Keep trade size modest because pre-IPO equity is highly illiquid and volatile.
Risks and counterarguments
- Execution risk at Zoom: AI integrations may not materially lift ARPU or could be slow to monetize. If product adoption stalls, multiples could compress and the stock would trade lower toward legacy SaaS multiples. This is the most material single-company risk for the Zoom leg.
- Competition and margin pressure: The collaboration market remains competitive (from large cloud providers and specialized vendors). Aggressive pricing or bundling by competitors could pressure growth and margins.
- Macro and valuation re-risk: A tech-led selloff or a prolonged high-rate environment could push Zoom’s multiple down despite healthy cash flow. Equity markets are still sensitive to macro shocks.
- Anthropic-specific risks: Pre-IPO shares are illiquid, likely subject to lockups and valuation uncertainty. If Anthropic’s model monetization or go-to-market underperform, private valuations can re-rate down sharply and quickly.
- Regulatory and privacy risk: AI companies and communication platforms face increasing scrutiny over data use, privacy and potential regulation; adverse rulings could materially impact both Zoom and AI model vendors.
Counterargument: One could argue that Zoom’s core growth runway is capped and the stock already prices in AI optionality; buying Anthropic pre-IPO instead of Zoom gives purer upside to model-led growth. That’s fair — if you have high risk tolerance and access to attractive Anthropic allocations, overweighting Anthropic can deliver more upside. My view is pragmatic: keep a capital-preserving core (Zoom) and add a small, high-conviction private stake in Anthropic. That balances liquidity, downside protection and upside.
What will change my mind
I would downgrade this trade if any of the following occur: a) Zoom consistently misses revenue or margin targets by a wide margin; b) management signals that AI monetization will be slower or less accretive than the market expects; c) Anthropic’s private-market valuations retreat dramatically or the company signals fundamental monetization constraints; or d) a macro shock forces broad tech multiple contraction that materially impairs the case for multiple expansion.
Conclusion
For investors seeking exposure to the generative-AI upside without giving up a reliable core holding, buying Zoom at roughly $92.11 and pairing that position with a small, opportunistic allocation to Anthropic pre-IPO is a pragmatic trade. Zoom provides cash generation, reasonable valuation and constructive technicals, while a modest Anthropic stake offers asymmetric upside if the AI model crowding into the public markets re-rates the sector. Keep position sizes disciplined, use the stop and target above for the Zoom leg, and limit Anthropic exposure to a small fraction of your portfolio due to liquidity and execution risk.
Key monitoring points: watch quarterly results for AI revenue line items, any deal announcements with major cloud or enterprise partners, product announcements that show clear ARPU lift, and private-market pricing on Anthropic trades or fund allocations.