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Equity & Macro Commentary, Technology Investing
Bloom Energy's much faster expected EPS growth makes its valuation more compelling than RingCentral's. At today's lows, Bloom was about 27x estimated 2027 EPS and 0.3x PEG on roughly 100% expected EPS growth; RingCentral was 15-16x and about 2x PEG on 8-9% growth. Bloom also beat Q3 revenue and EPS estimates by 16% and 40%, versus RingCentral's 1.5% and 4.5%. x.comÂ
RingCentral could reach $80 by the end of 2027 as investors come to see it as a durable cash-generating software company rather than a declining communications business. That requires 4-5% revenue growth, GAAP margin expansion ahead of schedule, debt cut to about $1 billion and proof that AI expands rather than replaces its platform. At just 7x forward free cash flow with improving profitability, it is an overlooked value stock that can deliver exceptional returns. x.comÂ
RingCentral's valuation looks difficult to justify given its modest growth and stock compensation. Its $240 million in SBC is roughly 40% of the cash flow it promotes; the implied opening price is about 22-23x cash flow and 85x GAAP earnings as growth moves only from 5.5% to 6%. AI ARR has had only a marginal impact on the overall business, while earlier profitability gains came from cutting bloated costs. x.comÂ
HubSpot barely needs to grow to justify today's valuation, given its current cash inflows, terminal value aside. That shows once the customer acquisition costs and growth spending in the P&L are accounted for. Reading through from IBM is silly, since IBM serves a totally different market. x.comÂ
HubSpot could have bottomed because its business held up through the stock's collapse while buybacks cut its share count. Q2 revenue grew 19.8% and free cash flow 44% year over year; net shares fell 4.4% last quarter. Shares trade at 17.5x free cash flow versus a two-year mean of 45x. All four models now agree. The 12-month bear, base and bull paths are $274, $317 and $360, respectively; November 4 Q3 results are the next test. x.comÂ
HubSpot is a long with much better management than peers, while monday.com is AI roadkill; the two are the only real comparables. Its valuation case needs realism, though: @CeleritasRe sees 2x forward sales as absurdly cheap if it reaches 30% terminal margins on 20% growth, but those margins are unlikely at that growth, and HubSpot is growing 17%. x.com x.comÂ
RingCentral fits the Stage 2 pattern: EPS has grown steadily, and estimates for the next three years are expected to accelerate almost exponentially. @FranVezz also points to a tremendous weekly breakout in the stock. x.com x.comÂ
HubSpot is the same great company at a completely different valuation, about 2x EV/sales and 10x EV/free cash flow versus 25x EV/sales five years ago. It is much bigger, still grows at solid double digits, has much stronger cash flow and high gross margins. x.comÂ
HubSpot is mathematically on track to accelerate, not die, because it has grown net new ARR faster than total revenue for about six straight quarters. Its failure to capture agent spending is a real and existential threat, but that is priced in and the game is not over. Exposure to SaaS remains small, so this is reasoning rather than table-pounding. x.com x.comÂ
HubSpot is at its most attractive entry point since 2022, about 8.4x implied forward earnings, if agentic AI eventually shows up in revenue, which it likely will. Adjusted operating margin expanded to 18%, deals above $120k ARR surged 64% as it wins upmarket against Salesforce, and it gets 6% more per customer each year while adding 16% more customers. Revenue growth has slowed to 18%, and not significantly raising the 2026 guide suggests management itself doesn't know if AI will lift revenue. … Show more