HubSpot's Earnings Crossroads: Can AI Drive the Next Growth Spurt?

HubSpot (HUBS) is set to report Q2 2025 earnings on May 8, 2025, a pivotal moment for the cloud-based software company as it navigates a year of heightened expectations—and scrutiny—around its AI-driven transformation. Investors will be watching closely for signs that the company’s aggressive investments in artificial intelligence are translating into sustained revenue growth and margin improvements. Here’s what to expect and why it matters.

The Numbers in Play

Analysts are forecasting a $2.13 EPS for Q2 2025, up 10% year-over-year from $1.94 in the same period in . Revenue is expected to hit $725.42 million, a 13.8% increase from Q2 2024’s $637.23 million. These estimates reflect a moderate slowdown from the 23% revenue growth recorded in Q2 2023, raising questions about whether HubSpot can sustain its momentum in a competitive software-as-a-service (SaaS) market.

The AI Opportunity—and the Hurdles

The earnings report will serve as a litmus test for HubSpot’s AI strategy, which has been central to its growth narrative. The company has poured resources into tools like Agent.AI, an AI-driven content generator integrated into its Content Hub, and Service Hub, which uses AI to streamline customer support. These innovations are designed to boost customer retention and cross-selling, key drivers of subscription revenue.

Yet, execution remains uncertain. While HubSpot’s Q1 2025 results saw revenue exceed estimates—$703.17 million versus a $700.4 million consensus—its EPS of $1.68 fell short of the $1.77 projection. Analysts will scrutinize whether the Q2 results close this gap, particularly as the company faces headwinds like slowing average subscription revenue per customer (projected to dip to $10,947.53 from $11,447 in 2024) and foreign exchange pressures.

Analyst Sentiment: A Mixed Bag of Bullishness

Despite the challenges, analyst sentiment remains predominantly positive, though tempered by recent revisions. As of May 2025, 24 of 29 analysts rated HubSpot “Bullish” or “Somewhat Bullish,” with an average price target of $750.28—a 26% premium to its current valuation. Notable upgrades include Goldman Sachs’ $900 price target and BMO Capital’s $885 target, citing AI’s long-term potential.

However, concerns linger. UBS downgraded its rating to Neutral, citing margin pressures, while Jefferies cut its target to $700, arguing that growth may not justify the stock’s high valuation. The Zacks Rank #3 (Hold) underscores these mixed signals, suggesting the market is waiting for proof that AI isn’t just a marketing buzzword but a revenue generator.

What’s at Stake?

HubSpot’s ability to expand margins while scaling its AI initiatives will be critical. In Q4 2024, non-GAAP operating margins hit 19%, and the company aims to maintain an 18% full-year 2025 margin, despite rising R&D costs. Investors will also focus on customer growth metrics, including total customers (expected to hit 257,242 in Q2, up 18.6% year-over-year), and net retention rates, which have historically been a strength but face pressure as competition intensifies.

The Bottom Line: A Make-or-Break Moment

HubSpot’s Q2 earnings are a crossroads. If it delivers beat-and-raise results, with strong AI adoption metrics and margin stability, the stock could surge toward its $980 price target, fueled by optimism about its AI-first future. A miss, however, could reignite concerns about its ability to sustain growth in a crowded SaaS landscape, with the Zacks Earnings ESP of -1.10% already hinting at cautious expectations.

Investors should look beyond the headline numbers to the details of AI integration, customer expansion trends, and margin guidance. With a 16.09% annual revenue growth forecast for 2026 and a “Strong Buy” consensus, the stakes are high for a report that could redefine HubSpot’s trajectory in the AI era. The market is all in—now it’s up to HubSpot to deliver.