Zoom Shows Growth Alone Does Not Restore Valuation

Zoom closed at $89.77 on Tuesday, up from $78.81 on Aug. 26 and above its 50-day moving average of $94.96 only recently before pulling back. The stock’s swings have been sharp, with RSI readings bouncing from deeply oversold levels of 6.9 in June to 61.1 on July 17, underscoring how quickly sentiment can change when a high-expectation name stops compounding at the pace investors once assumed.

Cisco is the older cautionary tale. The networking giant kept growing earnings after the dot-com crash, yet more than two decades later it still has not revisited its 2000 high, a reminder that durable profits do not automatically mean durable capital gains if the starting valuation is too rich.

The contrast matters for the market because it changes how investors should think about mature software and infrastructure names. Revenue growth, margin expansion and buybacks can all support a business, but they do not guarantee a stock will outperform if the market has already discounted that success far into the future.

That is especially relevant for Zoom, where the company’s own filings warn that revenue growth has fluctuated before and may decline again. Zoom also says more than 4,500 customers generated over $100,000 in trailing 12-month revenue as of April 30, showing a sizable enterprise base, but that customer depth has not been enough to restore the kind of valuation premium it briefly carried in 2021.

Cisco’s recent share action shows the opposite side of the same lesson. The stock had been a strong performer into mid-2026, peaking above $129 in June before easing to $112.18 on Tuesday, with RSI slipping to 43 and the price moving below its 50-day average of 116.40. Investors have rewarded the company’s cash generation and networking demand, but the long-term chart still reflects how hard it is to recover from a valuation reset.

For investors, the takeaway is that “growing into the valuation” is not a strategy so much as a hindsight story. The businesses that make it are remembered; the many that grow solidly but never re-rate are not.

The lesson lands just as broader market sentiment remains mixed, with Adalytica’s S&P 500 trade signals showing neutral sentiment and awareness. Ahead of upcoming earnings and any fresh guidance on enterprise spending, investors are likely to keep separating business quality from stock-price recovery — especially in names that once traded as if perfection were a base case.