Will Chegg's Shift From Q&A to AI-Based Services Pay Off in 2025?

The increased demand for AI tools across digital learning is substantially reducing traffic for basic subscription models, such as question-and-answer (Q&A) models, offered by ed techs like Chegg, Inc. CHGG. Given this sudden mass shift, the company is currently working on incorporating AI into its business model through its diversified service offerings, including Chegg Study, Chegg Skills and Busuu, and shifting away from its Q&A-based subscription model.

Chegg is currently focusing on revamping Chegg Study into a Personalized Learning Assistant through AI, which will help students improve their chances of graduating through a more effective learning process. Additionally, the company is also focusing on investments in the Busuu and Skills businesses, highlighting growth areas such as language learning, workplace readiness and upskilling. With Busuu's offerings undergoing enhancements across AI-powered features, including the new speaking bites product, it bodes well for Chegg.

For the remainder of 2025, the company remains committed to its goal of intensifying the incorporation of AI into its portfolio. Under Busuu’s B2C, Chegg expects to focus on product innovation, with a continued emphasis on AI as a driver of personalization.

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. CHGG is ensuring that it addresses all these aspects to cope with the ongoing AI shift, as well as to balance out its profitability structure. If Chegg can lean into current students’ wants across 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.

Chegg’s Competition Position in AI-Based Service Offering

Chegg, alongside other market players like Udemy, Inc. UDMY and Stride, Inc. LRN, occupy different niches in edtech, and their efforts to incorporate AI reflect that.

Udemy has aggressively leveraged AI-powered upskilling, launching its Innovation Studio, acquiring Lummi to enhance course material creation (particularly in visuals and design), and introducing generative AI tools such as AI Learning Assistants and Role Plays for soft skills development. On the other hand, Stride remains focused largely on the K-12 space, delivering online curricula, personalized learning paths and virtual/blended schooling solutions; however, explicit references to AI-enabled services in its product offerings have become less prominent in recent reporting.

Udemy appears to have advantages in scale, strong momentum in AI-tool integration and growing enterprise/subscription offerings, whereas Stride’s strength is its K-12 focus and scale in that segment, but unless it doubles down on AI in similar ways, it may lag in personalization and upskilling offerings. However, Chegg’s legacy content base, existing learners and its Busuu platform give it a foothold in language learning and academic support. Overall, Chegg’s edge over Udemy and Stride is modest, as it can survive and even thrive if its AI enhancements are well-executed comparatively.

CHGG Stock’s Price Performance & Valuation Trend

Shares of this California-based education technology company have surged 156% in the past six months, significantly 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 0.54, 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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