We recently compiled a list of the 11 Best Enterprise Software Stocks to Invest In. In this article, we are going to take a look at where HubSpot Inc. (NYSE:HUBS) stands against the other enterprise software stocks.
Enterprise software comprises applications designed for large organizations, which enable them to manage functions like data analysis, sales, marketing, and customer service. These solutions prioritize scalability, high user capacity, and seamless integration with existing systems. Grand View Research reported that the global enterprise software market is valued at $263.79 billion as of 2024 and is expected to expand at a 12.1% compound annual growth rate from 2025 to 2030. North America accounted for 41% market share of the global enterprise software industry in 2024.
Key trends such as Industry 4.0, digitization, and the rise of connected devices add to the demand for automated and integrated solutions. The shift towards hybrid work models has increased enterprise software adoption in sectors like healthcare and education. In healthcare, enterprise software enhances hospital management and electronic health records. Data safety and privacy are vital market drivers as organizations prioritize protecting sensitive information and comply with GDPR and HIPAA regulations.
Cloud-based enterprise software is expected to dominate the market share by over 55% in 2024 due to its accessibility and affordability, while on-premise solutions will gain traction as organizations seek enhanced customization and data security. Large enterprises accounted for over 62% of the market share, driven by the need to manage complex workflows efficiently. The IT & Telecom sector led with over 20% market share in 2024.
On December 11, Liz Young Thomas, SoFi’s head of investment strategy, and Angela Mwanza, Rockefeller Global Family Office private advisor, joined CNBC’s ‘Closing Bell’ to discuss their market outlooks and address the recent performance of tech stocks. Mwanza expressed a strong bullish outlook for the software sector as they approach the new year. She noted that while mega-cap tech stocks are highly valued, this does not indicate that they are overvalued. She suggested rebalancing portfolios to reduce concentration in these large-cap names while recognizing their growth potential. She highlighted that over the last 6 months, the MAG7 stocks have lagged behind the broader S&P 500, indicating a market broadening that could favor software investments.
Thomas supported this bullish sentiment by emphasizing the resilience of software stocks amid recent volatility in momentum stocks, particularly high-growth names. Despite some mega-cap stocks seeing dramatic year-to-date increases, some up to 900%, others have struggled. Looking into 2025, Thomas predicted uneven performance within the tech landscape and advised investors to focus on software companies. She expressed a stronger bullish sentiment towards this segment, suggesting that software stocks are well-positioned for continued growth as they head into the new year.
Methodology
We first sifted through ETFs, online rankings, and internet lists to compile a list of the top enterprise software stocks. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of software developers gathered around a monitor discussing a new CRM platform.
HubSpot Inc. (NYSE:HUBS)
Number of Hedge Fund Holders: 63
HubSpot Inc. (NYSE:HUBS) provides customer relationship management (CRM) software and empowers businesses to attract, engage, and delight customers. Its platform offers tools for sales, marketing, and customer service. Some of its features include AI-powered marketing automation, an app marketplace, and a community of users and partners.
Its growth is significantly driven by the rapid adoption of its AI-powered platform. Q3 2024 saw strong revenue growth of 20% year-over-year in constant currency, building upon 2023’s robust performance of 25.4% revenue growth. The recently launched Breeze platform, the company’s AI engine, encompasses Copilot, AI Agents, new features, and an agent marketplace.
AI awareness increased by 13% quarter-over-quarter, with a portion of enterprise and Pro customers actively engaging with AI features. Copilot, the AI assistant, has a 43% repeat usage rate, demonstrating early adoption among startups. The Customer Agent has empowered 25-30% of Kaplan’s customers to self-serve, leading to a 30% reduction in average ticket response time. The Content Agent has enabled Morehouse College to increase page views by 30% and improve time spent on the site by 27%.
These AI-powered solutions are empowering businesses to enhance efficiency, improve customer satisfaction, and drive revenue growth, solidifying HubSpot Inc.’s (NYSE:HUBS) position as the leading customer platform.
Artisan Mid Cap Fund stated the following regarding HubSpot, Inc. (NYSE:HUBS) in its Q3 2024 investor letter:
“Along with Dexcom and Celsius, a notable trim in the quarter wasHubSpot, Inc. (NYSE:HUBS). HubSpot is a leading cloud-based customer relationship management software provider for small-to-medium businesses. The stock was a top performer in 2023 as it meaningfully improved its profitability after several years of heavy investment. However, as we mentioned earlier in this letter, the environment for cloud software providers has been challenging in 2024 as macroeconomic pressures have impacted customer spending. Our long-term conviction remains intact, but we reduced the position due to near-term uncertainty. Meanwhile, we are encouraged by the company’s efforts to leverage AI advances to help internally (e.g., more efficient software development) and externally (e.g., new agent-based apps to help customers extract more value out of its products).”
Overall HUBS ranks 11th on our list of the best enterprise software stocks to invest in. While we acknowledge the potential of HUBS as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than HUBS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
