A Fresh Look at HubSpot (HUBS) Valuation as AI Upgrades Boost Growth and Customer Engagement

HubSpot (HUBS) just posted quarterly results that have people talking, with new highs in user engagement and a strong boost in customer sign-ups. The real eye-catcher is the surge in subscription revenues, up 19% year over year. This indicates that its AI-driven features are resonating with businesses. Growth was not just about more users either, as core products like Sales Hub and Service Hub saw waves of upgrades thanks to clever AI integrations.

This pickup comes after a year where HubSpot’s share price has been through some ups and downs. Despite steady expansion of its customer base, now 18% higher than this time last year, the stock is down roughly 3% over the past year and off about 31% year-to-date. Compared to its multi-year returns, momentum clearly is not what it was, even as business performance and innovation appear to be hitting their stride.

With the company firing on all cylinders operationally but the stock trailing, some may be considering whether HubSpot is shaping up as a promising value play or if the market is already banking on years of future growth.

Most Popular Narrative: 30.5% Undervalued

According to the community narrative, HubSpot’s shares are viewed as notably undervalued. Analysts see a sharp disconnect between current market pricing and future growth expectations.

The company's quick pivot to adapt to shifting buyer behavior, such as declining traditional SEO and the rise of AI-powered search, positions HubSpot to capture new sources of lead generation (YouTube, social, newsletters, LLM citations). This supports customer growth and improves the durability of top-line expansion.

How did HubSpot arrive at this bullish price target? The real revelation lies in the significant forecasted jump in both revenue and profitability, backed by some ambitious assumptions about its AI-driven strategy. Interested in the growth rates and margin targets behind this valuation? The projected climb for this CRM innovator may be steeper than expected.

Result: Fair Value of $695.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting buyer habits, along with declining SEO or setbacks in monetizing new AI features, could quickly challenge the bullish outlook for HubSpot.

Find out about the key risks to this HubSpot narrative.

Another View: Sizing Up Value with Multiples

Looking from a different angle, valuation based on sales ratios tells a more cautious story. By this method, HubSpot is actually priced above the industry average. Could this market premium be justified, or is it a warning sign?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out HubSpot for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own HubSpot Narrative

If you want to dig into the details and see where your own conclusions land, you can shape your own story with just a few clicks. Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding HubSpot.

Looking for More Smart Investment Opportunities?

Don’t settle for searching alone when you could be ahead of the curve. Let Simply Wall Street’s powerful screeners help you uncover strategies that match your ambitions and risk appetite. Here are a few routes to spot promising companies before everyone is talking about them:

• Capture potential growth early by targeting up-and-coming businesses with strong financials using our penny stocks with strong financials.
• Capitalize on innovation as revolutionary startups push healthcare forward with AI. Check out the possibilities with healthcare AI stocks.
• Maximize your returns by identifying stocks the market may have overlooked, all thanks to our focus on undervalued stocks based on cash flows.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com