Can HUBS' AI Innovation Boost its Competitive Edge in the CRM Space?

HubSpot, Inc. HUBS is witnessing consistent subscriber growth across multiple end markets. During the second quarter, HubSpot added more than 9,700 net new customers, which increased the total customer count to 267,982, up 18% year over year.

The company is aggressively integrating AI across its product suite to transform its HubSpot into an AI-powered customer platform. It has rapidly introduced several embedded AI native features in all hubs and rolled out AI agents to streamline work processes for clients. Its Customer Agent, which handles questions across marketing and sales with full context, is now used by 4,000 customers. Prospect Agent, which focuses on researching contacts in the client’s CRM and sends personalized outreach, has been adopted by 3,700 HupSpot customers.
 
HubSpot Sales Hub witnessed 71% year-over-year seat upgrades driven by growing demand for AI features such as deal intelligence, guided actions, and AI meeting assistant. HubSpot was one of the first to introduce connectors with ChatGPT and Claude. More than 20,000 customers have already utilized these LLM connectors across 23 million CRM records. The company’s acquisition of Frame.ai and Dashworks has accelerated HUBS’ AI advancement initiatives. With an aim to become an AI-first company, HubSpot is also integrating AI to boost efficiency across its internal processes. These factors are expected to drive customer growth in the upcoming quarters.

How Are Competitors Faring?

In the CRM space, HubSpot faces competition from Salesforce, Inc.  CRM and Microsoft Corporation MSFT. Microsoft has been actively incorporating advanced AI capabilities across its CRM offering, Dynamics 365. AI native tools like Dynamics 365 customer service, Dynamics 365 contact center, Dynamics 365 Customer Insights drive efficiency across multiple operations, including sales, marketing, finance, client support and more. MSFT’s Azure open AI services allow users to access OpenAI models, such as GPT-4 and DALL-E. Such capabilities are propelling growth in Microsoft’s Dynamics CRM business.

Salesforce is also continuously expanding its generative AI offerings to tap the growing opportunities in the space. The company’s leading-edge AI tools, such as Sales AI, Commerce AI, Marketing AI and Customer Service AI, are gaining strong popularity. In the second quarter, Salesforce introduced new MuleSoft AI capabilities, including support for Model Context Protocol and Agent2Agent, to enable secure, scalable AI agent orchestration, along with generative AI development tools to accelerate integration and multi-agent workflow deployment.

HUBS’ Price Performance, Valuation and Estimates

HubSpot has declined 3.9% over the past year compared with the industry’s growth of 40.7%.

Going by the price/book ratio, the company's shares currently trade at 11.99 book value, higher than 6.47 of the industry average.

HUBS’ earnings estimate for 2025 and 2026 have improved 1.5% to $9.49 per share and 0.98% to $11.36 per share, respectively, over the past year.

HubSpot currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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