The market's inclination toward digital learning, particularly AI-based alternatives, is favoring the edtech market and the firms operating within it, such as Chegg, Inc. (CHGG Quick QuoteCHGG - Free Report) and Duolingo, Inc. (DUOL Quick QuoteDUOL - Free Report) . Both stocks have drawn investor interest as the sector witnesses the rise of AI-driven tools and shifting demand dynamics.

Chegg focuses on homework help, textbook services and tutoring, while Duolingo operates a popular language-learning platform. Both firms cater to the growing and changing demands of students across digital education.

Let’s dive deep and closely compare the fundamentals of the two stocks to determine which one is a better investment now.

The Case for Chegg Stock

Chegg is redefining its business model with a new growth engine, Chegg Skilling, built by integrating Busuu and Chegg Skills. The cornerstone of this reinvention is its belief in the massive and rapidly expanding global skilling market, which is now estimated at more than $40 billion. Busuu is a language learning platform that offers AI-enhanced conversational tools, while Chegg Skills targets frontline workers and job-oriented upskilling, especially in AI skills, which are in exceptionally high demand. Together, these units already exhibit double-digit growth, with Chegg expecting the segment to finish 2025 with 14% year-over-year momentum and reach $70 million in annual revenues.

During the third quarter of 2025 earnings call, CHGG highlighted Latin America (LATAM) as a key geographic expansion opportunity for Busuu, given its pivot toward B2B skilling. Busuu already has a strong foundation in Europe and unlike many consumer-focused apps that emphasize translation or gamification, Busuu is built around conversational fluency and speaking proficiency.

Notably, the company is now prioritizing cash preservation and efficiency as it pivots away from its legacy academic services toward its faster-growing skilling business. On the third-quarter 2025 earnings call, Chegg indicated a 60% reduction in capital expenditure (capex), with the 2025 total capex expected to be about $27 million, down from about $60-$65 million spent in 2024. These savings are being enabled by prior AI investments, which now allow CHGG to maintain product quality with significantly lower ongoing spend.

However, sharp traffic losses due to AI tools and Google search changes are disrupting Chegg’s traditional academic services model. Subscriber attrition and weaker advertising demand underscore the erosion of its legacy business. Besides, ongoing restructuring, layoffs and one-time costs also highlight execution risk and uncertainty around the timing of a sustainable turnaround.

The Case for Duolingo Stock

The Pennsylvania-based edtech company, Duolingo, is gaining from increased user engagement, with daily active users continuing to grow at a healthy pace, with DAU (Daily Active Users) to MAU (Monthly Active Users) ratios steadily improving. Duolingo Max is steadily gaining traction and now accounts for a growing share of subscribers. Although Max adoption is progressing more gradually than initially hoped, its higher price point supports platform lifetime value. During the third quarter of 2025, DAUs and MAUs increased year over year by 35.8% to 50.5 million and 19.6% to 135.3 million, respectively.

Notably, product expansion beyond languages is emerging as a meaningful long-term catalyst for DUOL. Chess is scaling rapidly and has already surpassed Math and Music in usage on iOS, with early retention metrics exceeding those of language courses. This demonstrates Duolingo’s ability to expand its total addressable market and deepen engagement across multiple learning verticals under a single subscription model. AI-related unit costs are declining faster than expected, supporting gross margin expansion, while experiments with web-based checkout offer a structural opportunity to reduce platform fees and lift profitability over time. Together, these factors position Duolingo for durable, scalable growth.

Despite its strengths, Duolingo’s visible moderation in user growth, particularly in the U.S. market, is a key concern. While overall DAU growth remains solid, management acknowledged that growth slowed due to reduced viral marketing activity on social media after backlash related to AI commentary. Moreover, Duolingo Max is underperforming internal expectations because its core Video Call feature is currently too difficult for beginner users. This limits near-term monetization upside and creates execution risk around whether product refinements, such as guided or bilingual video calls, can materially improve conversion and retention at scale.

Management is deliberately prioritizing long-term user growth over short-term monetization, which has already led to slightly lower free-to-paid conversion. This strategy may pressure bookings growth into 2026, increasing uncertainty around the pace at which investments in AI and new content translate into tangible financial returns.

Stock Performance & Valuation

As witnessed from the chart below, during the past six months, Chegg’s share price performance has ranged above Duolingo’s, even though both stocks indicate a declining trend.

Image Source: Zacks Investment Research

Considering valuation, over the last five years, Duolingo has been trading above Chegg on a forward 12-month price-to-earnings (P/E) ratio basis.

Image Source: Zacks Investment Research

Overall, from these technical indicators, it can be deduced that CHGG stock offers a declining trend with a discounted valuation, while DUOL stock also offers a declining growth trend but with a premium valuation.

Comparing EPS Estimate Trends: CHGG vs. DUOL

CHGG’s earnings estimate for 2026 has remained stable at nine cents per share over the past 60 days. However, the estimated figure for 2026 indicates 221.4% year-over-year growth.

CHGG's EPS Trend

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for DUOL’s 2026 EPS indicates a year-over-year decline of 51.6%. The 2026 earnings estimate has trended downward over the past seven days.

DUOL's EPS Trend

Image Source: Zacks Investment Research

Which Stock to Favor: CHGG or DUOL?

The edtech space is undergoing a structural shift as AI-driven learning tools reshape user behavior and monetization models. Against this backdrop, Chegg and Duolingo present contrasting turnaround and growth narratives.

Chegg, which currently carries a Zacks Rank #3 (Hold), is in the midst of a strategic reset, pivoting away from its pressured legacy academic services toward the faster-growing global skilling market through Busuu and Chegg Skills. While traffic declines from AI disruption and Google search changes continue to weigh on its core business, a discounted valuation and stable earnings estimates suggest downside may be more contained if the skilling transition gains scale.

Conversely, Duolingo, which presently has a Zacks Rank #4 (Sell), continues to post strong engagement metrics and product innovation, supported by expanding content offerings. However, moderating user growth in key markets, slower-than-expected adoption of Duolingo Max and declining EPS estimates raise concerns. Its premium valuation amplifies execution risk as management prioritizes long-term growth over near-term monetization.

Thus, Chegg stock offers a higher-risk turnaround with valuation support, while Duolingo stock’s slowing momentum and elevated valuation justify a more cautious stance. Comparatively, it is prudent for investors to choose CHGG stock rather than DUOL stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.