Top AI Stocks to Watch: HubSpot Leads the Pack
When evaluating a stock’s potential, it’s essential to consider the company it keeps. HubSpot (HUBS) shares the spotlight with artificial intelligence powerhouses like Nvidia (NVDA), ServiceNow (NOW), and Palantir Technologies (PLTR) on the highly selective IBD Sector Leaders screen. Like its peers, HubSpot boasts a 99 Composite Rating, indicating exceptional performance.
Four Reasons HubSpot Stands Out
As a cloud-based sales and marketing firm, HubSpot provides an AI-powered platform serving over 238,000 customers across 14 global offices. Its integrated ecosystem of hubs targets marketing, sales, commerce, operations, and customer service operations. The company’s recent acquisition of Frame AI, an AI-powered conversation intelligence platform, further solidifies its position in the AI space.
Impressive Earnings Growth
HubSpot has generated average annual earnings growth of 77% over the last three years, with average per-share earnings gains of 37.6% over the last three quarters. In the third quarter, the company delivered a 35% year-over-year gain to $2.18 per share, with sales rising 20% to $669.7 million. Analysts forecast a 16% rise in sales to $673.6 million in the upcoming quarter, with earnings expected to increase 25% to $2.19 per share.
Technical Strength
Recovering from a sharp drop below its 10-week moving average in July, HubSpot shows signs of demand as it builds a new base. The stock boasts an A- Accumulation/Distribution Rating and a 1.3 up/down volume ratio, with 122 funds with an A+ rating from IBD owning shares. As its 50-day line continues to trend sharply upward, HubSpot is now testing support at its 21-day exponential moving average.
Industry Leadership
HubSpot hails from the specialty enterprise software group, which ranks No. 15 among the 197 industries IBD tracks. This is a positive sign, as winning stocks tend to come from top-ranked industry groups. The company also earns a spot on the IBD Big Cap 20 alongside Palantir and ServiceNow, both from the No. 10-ranked enterprise software group.
Base-on-Base Pattern
As the Nasdaq shows resilience, HubSpot stock continues to work on a base-on-base pattern. This formation has a higher likelihood of success than late-stage patterns, such as Nvidia’s latest breakout. The current target buy point is 762.47, with trading tightening up in recent weeks, potentially indicating a coiled spring ready to launch a new breakout.
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