Early this year, the entire software sector was rocked by an event dubbed the SaaSpocalypse as investors grappled with the idea that large language models and agentic AI could undermine the software-as-a-service (SaaS) business model.
HubSpot (HUBS -1.53%) and Salesforce (CRM +0.58%) both got hit hard in that sell-off, and they've kept sliding since. They are now down by 54% and 40%, respectively, year to date, even though artificial intelligence has been a catalyst for them, not a headwind.
The SaaSpocalypse threat doesn't carry much merit, and many of the stocks that sold off have partial recovered; the iShares Expanded Tech-Software Sector ETF, which was down by about 30% at one point year to date, is now down only 14%. Still, plenty of software stocks look compelling after the deep slump -- HubSpot and Salesforce among them. Here's what investors should consider if they want to choose between those two.
Image source: Getty Images.
Growth vs. profits
HubSpot is the riskier pick of the two, but it's also growing revenue at a faster rate: 23% in the first quarter compared to Salesforce's 14% year-over-yer revenue growth in its most recently reported fiscal quarter.
NYSE: HUBS
Key Data Points
HubSpot is also gaining market share at a faster rate. It recently branded itself as the "agentic customer platform," while Salesforce cited agentic AI as "the biggest growth opportunity for our customers."
However, Salesforce has HubSpot beat when it comes to profitability. Salesforce recorded a 19% net profit margin in its fiscal 2027 first quarter, while HubSpot only logged a 3.7% net profit margin in calendar Q1.
HubSpot only recently started delivering consistent profits, so it could theoretically expand its margins in the future. Salesforce offers higher margins right now.
Agentforce is a major Salesforce catalyst
Both companies are gaining market share in agentic AI, but Salesforce has more compelling numbers for its Agentforce segment. Agentforce lets companies build and deploy AI agents. Breeze AI does the same thing for HubSpot, but HubSpot includes those sales under its broader subscription revenue category rather than separating them out in a way that makes them clear for investors.
NYSE: CRM
Key Data Points
In its fiscal 2027 Q1 presentation, Salesforce revealed that Agentforce's annual recurring revenue had reached $1.2 billion, a 205% year-over-year increase. The AI platform makes its offerings even stickier, since it's even more of a pain for customers to switch to a competing CRM provider after they've set up their AI agents and customer relationship management tools on one platform.
That $1.2 billion in annual recurring revenue comes to $100 million per month, or $300 million per quarter. Salesforce earned $11.1 billion in total in its fiscal 2027 first quarter, which ended April 30, so it may take a while before Agentforce's expansion moves the needle in a meaningful way on the company's top line. However, it's operating in the background and gaining momentum while the rest of the business continues to expand its market share.
Investors don't know exact numbers for HubSpot's Breeze AI, but the company's overall revenue growth rate accelerated from 20% in Q4 2025 to 23% in Q1, so Breeze AI is definitely helping. Salesforce just has bigger baseline numbers, including $33.6 billion in current remaining performance obligations, up 14% year over year. It's also sitting on $67.9 billion in remaining performance obligations, which are set to be monetized over multiple years.
Salesforce has a better valuation
Valuation isn't always the decisive factor in picking stocks, but it certainly should play a role when comparing them. Salesforce's 17.7 P/E ratio offers a more generous margin of safety than HubSpot's premium 95.1 P/E ratio. In order to bring its earnings ratio down to the more reasonable zone where Salesforce trades, HubSpot will have to meaningfully improve its margins. That could take a while.
HubSpot's higher revenue growth rate suggests that it is gaining ground at a faster rate than Salesforce. That certainly bolsters the case for investing in HubSpot, but its high valuation leaves the stock more exposed to further declines if its revenue growth decelerates.
The decision between these two software stocks may ultimately come down to your risk tolerance. Salesforce offers solid growth rates and a more reasonable valuation. However, HubSpot has the potential to grow at a faster rate and expand its margins in the future. HubSpot is riskier but has a higher potential upside, while Salesforce appears to be a promising value stock.
