Is Now the Time to Buy Volatile EdTech and AI-Related Stocks Like Chegg, Skillz, and Teladoc? Identifying Strategic Buy Opportunities Amid Market Overreactions and Sector-Wide Momentum Shifts

The EdTech and AI sectors have long been characterized by their dual nature: immense transformative potential and extreme volatility. As 2025 draws to a close, these stocks-Chegg (CHGG), Skillz (SKLZ), and Teladoc Health (TDOC)-find themselves at a crossroads. A combination of macroeconomic turbulence, sector-specific challenges, and strategic corporate pivots has created a landscape where market overreactions may mask genuine opportunities for disciplined investors.

Sector-Wide Momentum and Structural Challenges

The global AI education market is projected to grow at a staggering compound annual growth rate (CAGR) of 36.02%, surging from $7.05 billion in 2025 to $112.3 billion by 2034, driven by workforce upskilling and digital infrastructure advancements. Venture capital inflows into AI edtech startups reached $89.4 billion in Q3 2025 alone. Yet, this optimism is tempered by reality. Revenue declines for some EdTech firms-such as a 66.4% year-over-year drop in Q3 2025-highlight the sector's fragility. Regulatory scrutiny, ethical concerns, and the gap between AI hype and tangible ROI have prompted a broader market rotation away from Big Tech and AI stocks toward traditional value sectors.

Chegg: Restructuring Amid a Shifting Landscape

Chegg's Q3 2025 results underscore its strategic pivot. Total net revenues fell 43% year-over-year to $77.7 million, but the company's focus on skilling and B2B SaaS models has yielded glimmers of hope. Chegg Skilling revenue is projected to grow 14% year-over-year to $18 million in Q4 2025. Cost-cutting measures, including a 45% workforce reduction and $100–110 million in annual savings, have improved adjusted EBITDA to $13.3 million in Q3 2025. Analysts remain divided, with a "Reduce" consensus rating, but KeyBanc's "Sector Weight" rating acknowledges the necessity of Chegg's strategic shift. The stock's 5.5% surge following the August PCE inflation report suggests market sensitivity to macroeconomic signals, though its forward P/E ratio of 16 implies skepticism about long-term growth.

Teladoc: Navigating Leadership and Profitability Headwinds

Teladoc's Q4 2024 results reveal a company in transition. Revenue declined 3% year-on-year to $640.5 million, with a GAAP loss of $0.28 per share. Both its Integrated Care and BetterHelp segments saw significant earnings declines, and the CFO's recent departure adds operational uncertainty. However, analyst price targets suggest optimism: a mean target of $9.26 implies a 30.12% potential upside. Teladoc's stock volatility-jumping 4.6% on the PCE report but falling 5.5% after a steeper-than-expected drop in U.S. consumer confidence-reflects its exposure to macroeconomic shifts. Investors must weigh its leadership challenges against its foundational role in digital healthcare.

Skillz: Resilience in a Competitive Niche

Skillz's Q3 2025 preliminary results show a narrowing net loss ($17.4 million vs. $21.1 million in Q3 2024) and a 28% year-over-year increase in paying monthly active users (PMAU) to 155,000. With $213 million in cash reserves, the company appears financially resilient despite sector-wide headwinds. Analysts estimate a $6.00 price target, though the stock's 4.5% rise on the PCE report and subsequent 5.5% drop alongside Teladoc highlight its susceptibility to broader market sentiment. Skillz's focus on gamified learning and AI-driven engagement could position it to benefit from the sector's long-term growth, provided it can scale profitability.

Strategic Buy Opportunities: A Balancing Act

The December 2025 market overreactions-triggered by Trump's tariff threats and consumer confidence declines-have created sharp price swings for these stocks. For instance, Chegg's 5.5% rally on the PCE report followed by a 7.2% drop suggests overcorrections that may not reflect intrinsic value. Similarly, Teladoc's 4.6% gain and 5.5% loss within weeks indicate a market struggling to price in long-term fundamentals.

Investors seeking strategic entry points must consider two factors:
1. Valuation Metrics: Chegg's price-to-book ratio of 0.49 and Teladoc's undervaluation relative to analyst targets suggest potential for mean reversion.
2. Structural Tailwinds: The EdTech AI sector's projected 36.02% CAGR and Skillz's user growth indicate underlying demand, even amid short-term volatility.

Risks and Caution

However, these opportunities are not without risks. Elevated interest rates reduce the present value of future earnings, and regulatory scrutiny could stifle innovation. For Chegg, the success of its skilling pivot remains unproven; for Teladoc, leadership instability and declining segment performance are red flags. Skillz's ability to monetize its user base will determine whether its cash reserves translate into sustainable growth.

Conclusion

The EdTech and AI sectors remain a study in contrasts: high-growth potential meets high volatility. Chegg, Skillz, and Teladoc are emblematic of this duality. For investors with a medium-term horizon and risk tolerance, the December 2025 market overreactions may present entry points-provided they are accompanied by rigorous due diligence. The key lies in distinguishing between temporary turbulence and structural transformation. As the sector navigates these crosscurrents, patience and a focus on fundamentals will be paramount.