We recently published a list of 10 Best SaaS Stocks to Invest In. In this article, we are going to take a look at where HubSpot, Inc. (NYSE:HUBS) stands against other best SaaS stocks to invest in.
Mobile devices are now running more sophisticated and complicated software applications, which supports improving demand for SaaS solutions that can be accessed only with the help of an internet connection. As of now, continuous innovation has been helping businesses in running their operations globally. It continues to improve scalability and flexibility in data storage. Experts opine that the SaaS domain has been aiding in major decision-making and strategy-building as dynamic technologies such as AI and ML have been intersecting with it.
SaaS Growth Drivers for 2025
As per Fortune Business Insights, the global Software as a Service (SaaS) market size was pegged at US$273.55 billion in 2023 and is expected to grow from US$317.55 billion in 2024 to US$1,228.87 billion by 2032. The US SaaS market is expected to grow significantly, reaching an estimated value of US$236.69 billion by 2032, courtesy of the adoption of public and hybrid cloud-based tools by enterprises. Overall, the SaaS market growth is expected to be fueled by numerous factors such as an increase in the adoption of public & hybrid cloud-based solutions, integration with other tools, and centralized data-driven analytics.
As per Straits Research, increased demand for smart devices and their applications has been aiding the broader market. Notably, end-user demand for intelligent devices is supported by the expansion of email, instant messaging applications, and video calls. This is expected to contribute to the expansion of the SaaS market. Also, higher spending on cloud-based solutions by end-use businesses can accelerate the expansion of the broader SaaS industry over the upcoming years.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Key Trends Likely to Help SaaS in 2025
With continuous advancements in technology, changing market demands, and increased dependence on cloud-based solutions, SaaS trends have been redefining the future of digital transformation for companies. Fortune Business Insights believes integrating AI and ML with SaaS Solutions will fuel broad-based market growth. This means that the adoption of AI/ML is expected to change the SaaS industry in many ways, mainly by improving the critical features of several software solutions. Notably, customizing & automating solutions, augmenting security, and improving human capacity are possible by incorporating SaaS solutions and AI/ML abilities.
Furthermore, SaaS has been continuously evolving and transforming services among cloud computing technologies. As per Fortune Business Insights, the key trending factors of SaaS are expected to continue to evolve and outline the future of cloud technologies, innovation, efficiency, and business values.
Our Methodology
To list the 10 Best SaaS Stocks to Invest In, we used a screener and scanned through several online rankings. Next, we chose the companies that were popular among hedge funds. Finally, the companies were arranged in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with 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) caters to the SaaS industry as it provides cloud-based solutions for marketing, sales, customer service, and content management. RBC Capital Markets upped the company’s price target to $825 from $750, giving an “Outperform” rating. The firm is optimistic about HubSpot, Inc. (NYSE:HUBS) due to an accelerated adoption and revenue growth of newer hubs, such as Service, Payments, CMS, and Operations. The analysts believe that the Sales Hub is expected to represent a larger market opportunity as compared to the Marketing Hub, reflecting that its adoption has the potential to accelerate and contribute to revenue growth.
RBC Capital Markets expects an improvement in retention rates as a result of the success of HubSpot’s CRM Suite and multi-hub adoption, together with HubSpot, Inc. (NYSE:HUBS)’s shift towards enterprise customers. As per the analysts, such factors are expected to continue to enhance unit retention rates. Furthermore, the firm anticipates HubSpot, Inc. (NYSE:HUBS) to achieve sustainable FCF generation as product and operational levers get activated.
Scotiabank upped its price objective on the company’s shares from $700.00 to $825.00, giving a “Sector outperform” rating on 8th January. Scotiabank analyst Nick Altmann’s optimism stems from the significance of HubSpot, Inc. (NYSE:HUBS)’s partner network in fueling the company’s success. Considering the larger deal sizes and multi-hub deals, the company is well-placed to continue its growth trajectory.
Overall, HUBS ranks 8th on our list of best SaaS stocks to invest in. While we acknowledge the potential of HUBS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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.
