Zillow Group (ZG) is back in focus after its second quarter 2026 results, which topped revenue expectations and showed higher non GAAP profit, helped by broader audience engagement and new AI powered product features.

Despite the Q2 beat and ongoing AI product rollout, Zillow Group’s recent share price performance has been weak, with the stock down sharply in both the year to date share price return and 1 year total shareholder return, which signals fading momentum even after earnings.

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Zillow Group now trades at a steep discount to both analyst targets and some intrinsic value estimates after a long slide. Is the market correctly pricing in the risks, or has caution run ahead of the fundamentals, as the valuation section shows next?

Most Popular Narrative: 46.7% Undervalued

Zillow Group’s most followed narrative points to a fair value of $62.86 versus the recent $33.49 close, highlighting a sizeable gap that rests on digital real estate trends and margin expansion.

The accelerated digital transformation of real estate, combined with Zillow's leading traffic, engagement, and product innovation including AI powered tools, integrated communication platforms (Follow Up Boss), and immersive experiences (SkyTour) positions the company to expand market share and drive higher user conversion rates. This is likely to result in above industry revenue growth and higher monetization per transaction.

Read the complete narrative. Read the complete narrative.

Curious what justifies that higher fair value for Zillow Group? The narrative leans on compound revenue growth, rising margins, and a richer profit base several years out. The exact mix of assumptions on topline, profitability and valuation multiples is where the story really gets interesting.

Result: Fair Value of $62.86 (UNDERVALUED)

However, Zillow Group’s story could change quickly if Google’s real estate ad products gain more traction or if ongoing legal and regulatory disputes pressure agent advertising budgets.

Another View: Zillow Group Through Earnings Multiples

The first fair value narrative for Zillow Group leans on future cash flows and long term growth. Yet today the stock trades on a P/E of 136.9x, compared with 18.1x for the US real estate sector, 86.2x for peers, and a fair ratio of 43.9x. That is a wide gap that points to real valuation risk if sentiment or expectations reset. Which lens do you trust more when those numbers clash?

Next Steps

This mix of optimism and concern around Zillow Group sets a clear tension for investors looking at the stock today. If you want to weigh the potential upside against the risks based on the underlying data, review the 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.