Linde Equity Fund’s Teal Linde says HubSpot (Hubspot Stock Quote, Chart, News, Analysts, Financials NYSE:HUBS) still has upside despite a sharp one-day move higher, arguing the software company remains well below previous levels and is positioned to benefit from AI-driven pricing changes.
Speaking on BNN Bloomberg’s Market Call on June 1, Linde joked that he regretted that HubSpot had already risen about 17% after he submitted it as a top pick earlier in the day.
“The software sector has been running up lately,” Linde said. “Software stocks took their biggest hit relative to the broad market ever in the first quarter of this year, and the IGV software ETF was down 25% in two months. Now we’ve seen a large comeback.”
But Linde said HubSpot still looked attractive despite the move.
“I still think there’s upside, even though it’s up 17% this morning, because it’s still down 35% year to date and almost 65% from where it was a year ago,” he said.
Linde said HubSpot’s opportunity is tied to how it incorporates AI into its products and pricing. He said the company recently beat expectations and raised its revenue and earnings outlook, but the stock fell about 20% after management said it was changing its pricing model to include AI.
“The analysts thought, ‘We’d like to see some more evidence that the pricing’s going to work,’ and the stock sold off,” Linde said. “Insiders bought $2.5-million, so obviously that was a show of confidence. And now we see the whole sector, including HubSpot, rallying.”
Linde said the broader software sector sold off earlier this year because investors feared AI agents would replace monthly software subscriptions. He said the bigger opportunity may be that AI-enabled software becomes more valuable as companies use digital workers to improve productivity.
“If companies are going to create digital workers that replace people you had to pay $5,000 a month for, that software is going to be worth a lot more than $200 a month,” he said. “That’s really the opportunity.”
Linde said investors need to identify companies that can offer digital workers that supplement human employees and create enough productivity value to justify higher software pricing.
The stock was down 56% over the previous 12 months and 57.8% over five years. Of the analysts covering the stock, 26 rated it “Buy,” nine rated it “Hold” and one rated it “Sell,” with a consensus target of US$274.
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