Zoom Video Communications stock climbed more than 11% on January 26. The surge came after Baird analysts revealed new estimates about a quiet investment the company made nearly two years ago.
In May 2023, Zoom announced a strategic partnership with Anthropic. The privately held company develops the Claude AI platform. At the time, neither company disclosed the financial details of the arrangement.
Zoom reported $51 million in strategic investments that quarter. Baird analyst William Power now estimates that entire amount went to Anthropic.
The numbers tell a compelling story. Anthropic is currently valued at $350 billion. Based on that valuation, Zoom’s original $51 million investment could now be worth between $2 billion and $4 billion. The range depends on dilution assumptions.
That represents a potential return of roughly 78 times the initial investment. Power described this as a “hidden gem” that the market has largely overlooked.
Zoom became a household name during the Covid-19 pandemic. The video conferencing platform saw explosive growth as remote work became the norm. But the company’s fortunes have cooled since then.
The stock price has struggled in recent years. Revenue growth has slowed. The company has been working to find new growth drivers.
Enter artificial intelligence. Zoom has been developing AI-related products to reignite revenue growth. The company has shown improving customer metrics and stronger call volumes. It has also been expanding its CX phone and product offerings.
But the Anthropic investment may prove to be the real winner. Anthropic has seen explosive growth over the past 18 months. The AI boom has driven demand for platforms like Claude.
Anthropic has not announced concrete plans for an initial public offering. However, the company has made moves that suggest an IPO is coming. Reports indicate Anthropic has hired a law firm known for advising companies through the IPO process.
If Anthropic goes public, it could be a major event. The company is a pure-play AI developer. Claude has gained prominence in the rapidly growing AI market.
An IPO would likely crystallize the value of Zoom’s investment. It could provide a substantial windfall for shareholders.
Wall Street analysts are taking notice. Among 21 analysts covering Zoom, 13 rate it a Buy. Seven give it a Hold rating. One analyst has a Sell rating.
The average price target sits at $99.11. That implies roughly 4.78% upside from current levels. But that target was set before the Anthropic valuation estimates emerged.
Analysts are now reassessing Zoom’s prospects. The Anthropic stake adds a new dimension to the investment case. It provides potential value beyond the core video conferencing business.
Zoom closed trading at $95.42 on January 26. The stock is still well below its pandemic-era highs. But the Anthropic investment could provide a catalyst for revaluation.
The company made the investment at $51 million in May 2023. Anthropic’s current $350 billion valuation suggests Zoom’s stake has grown substantially since then.
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