AI-Driven Software Spending to Reach $400 Billion by 2028: 2 Stocks to Buy Now

Morgan Stanley estimates AI software sales will increase by 580% to $400 billion by 2028. AppLovin and HubSpot are likely to benefit from this trend, with median target prices of $470 and $750 per share, respectively. AppLovin's adtech software, including its AI-powered targeting engine Axon, and HubSpot's embedded AI capabilities throughout its CRM platform, make them well-positioned to capitalize on growing AI software spending.

The artificial intelligence (AI) market is poised for explosive growth, with Morgan Stanley estimating that AI software sales will increase by 580% over the next three years, reaching $400 billion by 2028 [1]. This growth presents significant opportunities for companies like AppLovin and HubSpot, which are well-positioned to capitalize on the expanding AI software market.

AppLovin's AI-Powered Adtech

AppLovin, a leading adtech company, has been a standout performer in the AI space. The company's proprietary AI-powered targeting engine, Axon, has been praised for its ability to match advertiser demand with publisher supply across connected TV and mobile devices [1]. Axon has delivered superior return on ad spend for brands on the platform, making it a "best in class machine learning ad engine" according to Morgan Stanley analysts [1].

AppLovin's first-quarter financial results were impressive, with total revenue increasing 40% to $1.4 billion and GAAP earnings climbing 149% to $1.67 per diluted share [1]. The company guided for 69% advertising sales growth in the second quarter, indicating strong momentum in its AI-driven adtech business.

HubSpot's Embedded AI CRM

HubSpot, a customer relationship management (CRM) software company, has also been integrating AI capabilities into its platform. Its AI engine, Breeze, can summarize CRM records, draft emails, create webpages, generate social media posts, and provide customer support [1]. Breeze can also analyze information, surface insights, and make recommendations that improve efficiency across sales, marketing, and customer service workflows.

HubSpot's first-quarter financial results were mixed due to macroeconomic uncertainty, but the company's AI adoption showed promise. CEO Yamini Rangan reported that Content Hub attach rates and Service Hub adoption have improved significantly due to embedded AI [1].

Analyst Target Prices

Wall Street analysts see substantial upside in both AppLovin and HubSpot stocks. Among 31 analysts that follow AppLovin, the median target price is $470 per share, implying 29% upside from its current share price of $364 [1]. Among 38 analysts that follow HubSpot, the median target price is $750 per share, implying 38% upside from its current share price of $542 [1].

Conclusion

The AI software market's growth presents significant opportunities for AppLovin and HubSpot. Both companies are well-positioned to benefit from the expanding AI software market, with AppLovin's AI-powered adtech and HubSpot's embedded AI CRM capabilities driving their growth prospects. Investors should consider these companies as potential beneficiaries of the AI software market's growth.

References:
[1] https://www.fool.com/investing/2025/07/20/ai-sales-soar-580-2-ai-stocks-buy-now-wall-street/