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HUBS provides an all-in-one marketing, sales, and services platform.
AI tools threaten to undercut legacy per-seat software subscription models.
HUBS suffers from peaking margins and potential product cannibalization.
HubSpot Company Overview
Headquartered in Cambridge, MA, Zacks Rank #5 (Strong Sell) stock HubSpot Inc. ((HUBS - Free Report) ) is a prominent cloud-based Customer Relationship Management (CRM) platform thathelps primarily small-to-medium-sized businesses (SMBs) grow sales. HubSpot’s all-in-one HubSpot Growth platform combines the following three verticals into one platform: the Marketing Hub, the Service Hub, and the Sales Hub. Below is a breakdown of the capabilities of each:
· Marketing Hub: Helps users create marketing automation emails, Content Optimization Systems (COS), social media outreach and management, and provides CRM reporting and analytics.
· Sales Hub: Features include email engagement notifications, meetings, calling, new lead alerts, and website visit alerts, email templates, and CRM tracking and contact insights.
· Service Hub: Features include automation and routing, live chat and conversations, conversational bots, team emails, help desk and tickets, reporting tools and feedback.
Software Stocks Have Plummeted Recently
Despite the software industry’s robust long-term performance, the group’s performance has deteriorated dramatically over the past few months. Below are some of the software group’s biggest losers (sorted by drawdown from all-time highs):
The horrific performance in many former leading software stocks is no accident. With the advent of advanced AI tools, investors are increasingly concerned that AI will disrupt these once-lucrative businesses. In fact, there are plenty of signs that this is already occurring. The latest AI tools, like Anthropic’s “Claude Coworker”, help companies perform tasks much faster than legacy software companies and at a fraction of the cost.
The End of Seat-Based Software?
HubSpot has done its best to embrace innovation by investing in data center infrastructure and its AI efforts. However, the new, top-of-the-line AI programs threaten to end the legacy software subscription model that forces companies to pay per user and generates the juicy profits associated with legacy software leaders. HUBS’ gross profit margins peaked in early 2025.
Image Source: Zacks Investment Research
HubSpot: Cannibalization is a Concern
HubSpot recently introduced a low-cost $20 per month starter pack, which includes limited features in an effort to attract new customers. Although the incentive is likely to attract new customers, the effort could cannibalize HubSpot’s premium products.
HUBS: Relative Weakness & Downtrend
Although HUBS is still growing at a moderate clip (for now), its price action is telling. The stock is down more than 20% year-to-date, signaling formidable relative weakness. Meanwhile, HUBS shares are below the key moving averages and falling on heavy volume – a crystal-clear sign of heavy distribution.
Image Source: TradingView
Bottom Line
Despite its established position as a CRM leader for small-to-medium sized businesses, HubSpot currently faces a challenging crossroads. With the emergence of powerful, AI-driven alternatives, HubSpot’s margins are likely to be threatened.
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Bear of the Day: HubSpot (HUBS)
Key Takeaways
HubSpot Company Overview
Headquartered in Cambridge, MA, Zacks Rank #5 (Strong Sell) stock HubSpot Inc. ((HUBS - Free Report) ) is a prominent cloud-based Customer Relationship Management (CRM) platform thathelps primarily small-to-medium-sized businesses (SMBs) grow sales. HubSpot’s all-in-one HubSpot Growth platform combines the following three verticals into one platform: the Marketing Hub, the Service Hub, and the Sales Hub. Below is a breakdown of the capabilities of each:
· Marketing Hub: Helps users create marketing automation emails, Content Optimization Systems (COS), social media outreach and management, and provides CRM reporting and analytics.
· Sales Hub: Features include email engagement notifications, meetings, calling, new lead alerts, and website visit alerts, email templates, and CRM tracking and contact insights.
· Service Hub: Features include automation and routing, live chat and conversations, conversational bots, team emails, help desk and tickets, reporting tools and feedback.
Software Stocks Have Plummeted Recently
Despite the software industry’s robust long-term performance, the group’s performance has deteriorated dramatically over the past few months. Below are some of the software group’s biggest losers (sorted by drawdown from all-time highs):
· UiPath ((PATH - Free Report) ): -84%
· Paycom Software ((PAYC - Free Report) ): -73%
· The Trade Desk ((TTD - Free Report) ): -70%
· DocuSign ((DOCU - Free Report) ): -65%
AI is Disrupting Legacy Software
The horrific performance in many former leading software stocks is no accident. With the advent of advanced AI tools, investors are increasingly concerned that AI will disrupt these once-lucrative businesses. In fact, there are plenty of signs that this is already occurring. The latest AI tools, like Anthropic’s “Claude Coworker”, help companies perform tasks much faster than legacy software companies and at a fraction of the cost.
The End of Seat-Based Software?
HubSpot has done its best to embrace innovation by investing in data center infrastructure and its AI efforts. However, the new, top-of-the-line AI programs threaten to end the legacy software subscription model that forces companies to pay per user and generates the juicy profits associated with legacy software leaders. HUBS’ gross profit margins peaked in early 2025.
Image Source: Zacks Investment Research
HubSpot: Cannibalization is a Concern
HubSpot recently introduced a low-cost $20 per month starter pack, which includes limited features in an effort to attract new customers. Although the incentive is likely to attract new customers, the effort could cannibalize HubSpot’s premium products.
HUBS: Relative Weakness & Downtrend
Although HUBS is still growing at a moderate clip (for now), its price action is telling. The stock is down more than 20% year-to-date, signaling formidable relative weakness. Meanwhile, HUBS shares are below the key moving averages and falling on heavy volume – a crystal-clear sign of heavy distribution.
Image Source: TradingView
Bottom Line
Despite its established position as a CRM leader for small-to-medium sized businesses, HubSpot currently faces a challenging crossroads. With the emergence of powerful, AI-driven alternatives, HubSpot’s margins are likely to be threatened.