HubSpot (HUBS) stock has sunk 48% so far this year amid fears about the impact of the proliferation of AI on the company. Indeed, HUBS' financial results have deteriorated amid the AI Revolution.
However, after a key Meta (META) executive recently joined HubSpot's board, Meta's expertise in AI could help improve the smaller firm's financial results over the longer term. Moreover, META could eventually decide to acquire HUBS, and the ongoing AI initiatives that HUBS is undertaking could also improve its performance down the road. Nonetheless, in the short-to-medium term, HUBS stock will probably continue dropping.
About HUBS
HubSpot's software automates a number of key corporate functions, including marketing and customer relationship management. Among its key customers are WeightWatchers (WW), Motorola Solutions (MSI), and DoorDash (DASH).
In 2024, HUBS generated revenue of $2.6 billion, along with an operating loss of $63.6 million. Last quarter, its top line increased 18%, excluding currency fluctuations, versus the same period a year earlier to $809.5 million, while its operating income came in at $11.2 million, versus an operating loss of $9.6 million in Q3 of 2024. The firm's operating margin in Q3 of 2025 was only 1.4%.
HubSpot has a forward price-earnings (P/E) ratio of 39.5 times, while its price-sales ratio is 7.9 times and its market capitalization is $20.9 billion. Despite the recent struggles of the shares, which gave back 11.5% in the month that ended on Nov. 8, their valuation remains elevated.
Some Deterioration in Financial Results
In 2023, before the AI wave had gathered tremendous steam among small-to-medium businesses, HUBS' revenue climbed 25%. Conversely, last quarter, its revenue, as noted earlier, increased just 18% year-over-year (YoY), excluding the impact of currency changes.
Similarly, the company's net revenue retention levels fell from “above 110%” in 2021 to 103% last quarter.
Meta and AI Initiatives Can Help in the Longer Term
On Nov. 5, HubSpot announced that Clara Shih, Meta’s top business AI executive, would join its board of directors. Shih has significant experience in AI. In addition to her role at Meta, which she began in 2024, Shih was CEO of Salesforce (CRM) AI beginning in 2023. Before heading Salesforce AI, Shih led Salesforce's Services Cloud business, where she launched multiple AI systems.
Meanwhile, Meta is a prolific user of AI, as it consistently augments its already powerful AI tools and recently even decided to provide users with “ads… based on their interactions with the company’s digital assistant and other products powered by artificial intelligence.”
Shih's decision to join HUBS' board suggests that Meta may be willing to share at least a portion of its AI knowledge with HubSpot.
Perhaps one of the deliverables that Meta expects to receive in return is the utilization of the AI systems that HUBS has developed
In September, HubSpot announced that it had developed “hybrid” AI-human development teams and unveiled new data utilization tools that incorporate AI. Additionally, the company, which has been developing marketing software for nearly 20 years, likely has a great deal of data that can help AI systems determine which marketing techniques are most effective.
Another tool in HUBS' arsenal is XFunnel. According to the company, the latter product, which HUBS recently agreed to acquire, is “one of the first comprehensive platforms that helps businesses monitor, experiment with, and strengthen their presence across” large language models (LLMs) through Answer Engine Optimization (AEO).
And indicating that HUBS' AI products may indeed be very effective, the company reported that “Customers using (the) embedded AI features in (its) Marketing Hub (offering) experienced over 50% higher lead conversion.”
It's very possible that the combined AI expertise of Meta and HubSpot could meaningfully improve HUBS' performance over the longer term. However, such transformations often take at least a year or two, and the Street usually waits to see changes sizably impact companies' financial results before boosting their stocks.
Finally, Shih's appointment to HUBS' board could indicate that Meta is considering buying HUBS. Acquiring HUBS would allow META to more effectively pitch its ads to the smaller company's customers. Additionally, a takeover could allow META to benefit more fully from HUBS' technology and data while boosting its profitability through synergies.
The Bottom Line on HUBS Stock
Given HUBS' high valuation and continued fears about the negative impact of AI on its results, the shares may continue to drop for the foreseeable future. But in the longer term, the name could eventually rebound above its current levels as the firm's AI tools improve and more firms realize that its technology is effective. Further, HUBS could become a takeover target for META or another tech giant.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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