Will Homes.com’s AI Push Reveal a New Digital Edge for CoStar Group (CSGP)?

• Homes.com, a leading platform under CoStar Group, has launched Smart Search, an AI-driven home search tool using natural language to personalize and accelerate the home-finding process.
• This advancement could shift consumer expectations for real estate technology, with Homes.com aiming to further streamline and individualize the user experience.
• We'll now assess how the AI-powered Smart Search feature may influence CoStar Group's outlook and digital strategy narrative.

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CoStar Group Investment Narrative Recap

To be a CoStar Group shareholder, you need to believe in the company's ability to leverage digital transformation in real estate while managing aggressive growth investments, especially in Homes.com. The recent launch of AI-powered Smart Search could enhance CoStar’s user engagement and top-line ambitions, but it does not materially offset near-term risks around rising operating expenses and slower profitability, still the most important short-term catalyst and risk, respectively, heading into the Q3 earnings report.

Among recent headlines, CoStar’s raised full-year revenue outlook following its Q2 2025 results stands out, as it supports the narrative that investments in platforms like Homes.com may be translating into increased revenue opportunities. This context makes the Smart Search rollout especially relevant, since showing tangible product innovation may foster user and advertiser growth, impacting the revenue catalyst investors are watching.

By contrast, investors should be aware that if the heavier investment in Homes.com fails to deliver the anticipated adoption and margin improvement, operating costs could...

Read the full narrative on CoStar Group (it's free!)

CoStar Group's narrative projects $4.7 billion in revenue and $866.2 million in earnings by 2028. This requires 16.9% yearly revenue growth and a $762 million earnings increase from $104.2 million today.

Uncover how CoStar Group's forecasts yield a $97.12 fair value, a 28% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided three fair value estimates for CoStar Group, ranging sharply from US$57.89 to US$139.70. With profitability still under pressure due to high operating costs, you should consider a range of market views.

Explore 3 other fair value estimates on CoStar Group - why the stock might be worth 24% less than the current price!

Build Your Own CoStar Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your CoStar Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free CoStar Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate CoStar Group's overall financial health at a glance.

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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.

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