11 Best Cloud Stocks to Buy According to Analysts

4. HubSpot, Inc. (NYSE:HUBS)

Number of Hedge Fund Investors  in Q1 2024: 55

Analyst Average Share Price Target: $664.21

Upside: 40%

HubSpot, Inc. (NYSE:HUBS) is a diversified customer relationship software management provider. Its products cover marketing, online content management, operations management, and other business processes. When compared to several other cloud stocks on our list, HubSpot, Inc. (NYSE:HUBS)  has managed to post stable revenue growth over the past couple of years. At the same time, the cyclical nature of the cloud industry which often pushes out deal making to the later quarters of a year means that HubSpot, Inc. (NYSE:HUBS) remains vulnerable to slowdown during the first quarter. To mitigate this, the firm lowered the entry level prices for its platform and also introduced changes to allow customers to easily upgrade their packages. HubSpot, Inc. (NYSE:HUBS)’s business, which allows it to target content generation, also enables it to become an early mover in AI among cloud computing stocks. As its revenue slowed in Q1, the firm announced 70 AI features for its products in April 2024. These features are focused on brand management, and they allow businesses to unify their brand pitches along a thematic framework. HubSpot, Inc. (NYSE:HUBS)  also benefits from being able to provide its customers with AI powered chatbots for their customer management.

For the Q1 slowdown, here’s what HubSpot, Inc. (NYSE:HUBS)’s management had to say during the earnings call:

Switching gears to macro. After a strong finish in Q4, we saw a return to weaker demand conditions in the first quarter, similar to what we experienced in 2023. The buyer urgency that we saw in December did not carry over into Q1. Instead, we saw a return to higher scrutiny of budgets, more decision makers getting involved, and a need for more demos and proof-of-concepts before signing-off on purchase decisions. At the top of the funnel, we saw lead flow shift away from higher quality inbound and partner source leads to lower quality rep source leads. This shift, plus the lower buyer urgency slowed down deal progression and in some cases pushed deals out of Q1 and into Q2. While deal close and upgrade rates remain under pressure, we continue to see strong customer dollar retention in the high-80s which underscores the value that our unified customer platform delivers for our customers.