HubSpot AI Rollout Fails To Ease Concerns Over Stagnant Margins

HubSpot (NYSE:HUBS) shares slipped Thursday as the company unveiled over 200 product updates at its INBOUND 2025 event, pitching AI-driven growth initiatives but holding firm on its 2027 margin outlook, leaving investors weighing innovation against profitability.

The Boston-based software firm introduced a blueprint for hybrid human-AI teams and rolled out a significant upgrade to its data platform, expanding support for unstructured data and integrations with over 100 third-party platforms.

Piper Sandler analyst Brent A. Bracelin initiated coverage on the stock with an Overweight rating, and a price forecast of $675.

Also Read: This HubSpot Analyst Begins Coverage On A Bullish Note; Here Are Top 5 Initiations For Thursday

Bracelin explained that HubSpot historically relied on a bi-modal approach, combining steady customer growth with new product hubs that lifted ARPU.

Looking ahead, the company outlined two fresh growth drivers: first, a new Smart CRM seat priced at $45+ per month that could raise paid seat adoption to about 60% of users versus roughly 20% before, and second, new AI consumption credits tied to embedded features.

Bracelin noted that while some investors may have hoped for higher 2027 margin goals beyond the 20–22% range, the updated outlook left him more optimistic that product launches and platform upgrades could support growth and margin leverage.

The analyst added that after a 46% drop from February highs, HUBS looks oversold and undervalued at 6.9x forward EV/S, close to its five-year low of 5.9x.

HubSpot kept its 2027 operating margin target unchanged at 20–22%, along with its long-term goal of 25% set last year.

The analyst writes that this decision may disappoint investors who had expected a small upward revision, especially since the 2H25 midpoint guidance already points to 21%.

On a full-year view, however, the company still has room for margin expansion in 2026 and 2027 compared with the formal 2025 guide of 18.5%.

Price Action: HUBS shares are trading lower by 0.94% to $468.25 at last check Thursday.

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