Is Chegg Well-Positioned to Monetize the GenAI Education Shift?

With AI-based learning alternatives gaining momentum in demand, Chegg, Inc. CHGG is undertaking several enhancement initiatives to stay ahead of the trend and enhance its revenue visibility. There are indeed market pressures in this field of business, with growing market competition and the need to offer services at favorable and attractive pricing. The company is ensuring that it looks after all these aspects to cope with the ongoing AI shift as well as balance out its profitability structure.

Currently, Chegg is focusing on enhancing the Chegg Skills product and implementing AI to transform Chegg Study into a more efficient business. For September 2025, the company plans to launch two new core capabilities into the existing user interface, further enhancing Chegg Study into a personalized learning coach for the modern learner.

Besides Chegg Study, the company is also benefiting from its investments in the Busuu and Skills business, highlighting growth areas including language learning, workplace readiness and upskilling. For the second half of 2025, under B2C, the company expects to focus on product innovation with continued emphasis on AI as a driver for personalization.

Summing up, if Chegg can lean into current students’ wants like AI tools built for education, trusted curated content and human oversight, and pivot more strongly toward skills, institutional licensing or enterprise solutions, it could carve out a strong niche. Additionally, its disciplined cost management and restructuring actions also lay a strong foundation for long-term growth, given the market fundamentals. For 2025, CHGG expects to realize adjusted expense savings between $165 million and $175 million, with $100-$110 million adjusted savings expected in 2026.

Does GenAI Shift Offer Competition Pressures on Chegg?

Chegg has carved out a competitive edge over Coursera, Inc. COUR and Udemy, Inc. UDMY in the evolving landscape of Gen AI education by leveraging its unique positioning as a direct student-focused platform.

Coursera primarily partners with universities to provide long-form and credential-based programs. However, this model often appeals more to career professionals or lifelong learners seeking credentials, rather than to students needing immediate academic support. Chegg, on the other hand, focuses squarely on the student segment, embedding Gen AI tools into daily study workflows—whether through AI-powered tutoring, personalized study aids or real-time problem-solving.

On the other hand, Udemy offers a wide marketplace of AI-related courses targeting professionals and lifelong learners. Chegg differentiates itself by tailoring Gen AI capabilities to academic success, rather than broad workforce training. Furthermore, Chegg’s strong subscription-based model ensures recurring engagement, which contrasts with Udemy’s one-time course purchase structure and Coursera’s heavier reliance on credentialing.

CHGG Stock’s Price Performance & Valuation Trend

Shares of this California-based education technology company have surged 56.2% in the past month, outperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector and the S&P 500 index.

CHGG stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-sales (P/S) ratio of 0.49, as evidenced by the chart below. The discounted valuation of the stock, compared with its peers, advocates for an attractive entry point for investors.

Earnings Estimate Trend of CHGG Stock

CHGG’s bottom-line estimates for 2025 indicate a loss per share, while those of 2026 indicate break-even earnings. Over the past 60 days, the loss estimates for 2025 have contracted to 11 cents per share, while those of 2026 have contracted to a breakeven point.

Although the estimated figures for 2025 indicate a downtrend of 114.7% year over year, estimates for 2026 indicate 100% growth.

Chegg stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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