Will Chegg's 60% CapEx Cut in 2026 Free Up Enough Fuel for Growth?
Chegg, Inc. CHGG has been heavily investing in upgrading its digital platform and diversifying its offerings to meet the current market trends. The investment intensity is now expected to calm down, as highlighted by the ed tech company. The company is now prioritizing cash preservation and efficiency as it pivots away from its legacy academic services toward its faster-growing skilling business. On the third-quarter 2025 earnings call, Chegg indicated a 60% reduction in capital expenditure (capex), with the 2025 total capex expected to be about $27 million, down from about $60-$65 million spent in 2024. These savings are being enabled by prior AI investments, which now allow CHGG to maintain product quality with significantly lower ongoing spend.Recently, the company split its business operations into two divisions – a cash-generating legacy academic business and Chegg Skilling, which includes Busuu and Chegg Skills. All incremental growth investment is being directed toward skilling, which a market management estimates to be more than $40 billion, and is increasingly driven by enterprise demand for AI, workforce and language training. Chegg Skilling is expected to have exited 2025 with roughly $70 million in revenue and deliver mid-teens growth, including a projected 14% year-over-year increase in the fourth quarter of 2025 alone.However, the sharp cuts in capex do not come without risks. Chegg’s net revenues declined 35.8% year over year during the first nine months of 2025, with free cash flow being pressured by restructuring costs and one-time payments. Sustaining product relevance in skilling, especially as competition intensifies, will require disciplined reinvestment, even with lower absolute capex.Nonetheless, the 60% capex reduction appears less like a growth constraint and more like a strategic reset. If Chegg can successfully convert cost savings into focused B2B skilling investments, the move could provide the financial runway needed to stabilize cash flow in 2026 and rebuild a credible growth narrative beyond its challenged core business.Earnings Estimate Trend of CHGGThe Zacks Consensus Estimate for 2025 loss has widened in the past 60 days to 14 cents, while earnings estimates for 2026 have moved up to 18 cents.Image Source: Zacks Investment ResearchAlthough the estimated figure for 2025 indicates a decline of 118.7% year over year, projections for 2026 indicate a whopping 228.6% growth.Chegg Stock’s Price Performance vs. Other EdTech PlayersShares of this California-based education technology company have gained 4.7% in the past month, outperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector and the S&P 500 Index.Image Source: Zacks Investment ResearchChegg operates in a highly competitive landscape, with renowned names like Duolingo, Inc. DUOL and Coursera, Inc. COUR operating beside it in the ed tech market. In the past month, shares of Duolingo and Coursera have tumbled 15.7% and 10.1%, respectively.CHGG’s Valuation TrendCHGG stock is currently trading at a discount compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 5.13, as evidenced by the chart below.Image Source: Zacks Investment ResearchNotably, Duolingo and Coursera are currently trading at a forward 12-month P/E ratio of 42.37 and 15.67, respectively.Chegg currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Chegg, Inc. (CHGG): Free Stock Analysis Report Coursera, Inc. (COUR): Free Stock Analysis Report Duolingo, Inc. (DUOL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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