diff --git a/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabels.vue b/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabels.vue
index 2f6b413f8..dfd4115e8 100644
--- a/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabels.vue
+++ b/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabels.vue
@@ -1,175 +1,95 @@
 <script setup>
-import { ref, computed, nextTick, useSlots, watch, useAttrs } from 'vue';
-import { useI18n } from 'vue-i18n';
-import { useThrottleFn } from '@vueuse/core';
-import { useMapGetter } from 'dashboard/composables/store';
-
-import Button from 'dashboard/components-next/button/Button.vue';
-import Label from 'dashboard/components-next/label/Label.vue';
+import { ref, computed } from 'vue';
 
 const props = defineProps({
-  labels: {
+  conversationLabels: {
     type: Array,
     required: true,
   },
-  disableToggle: {
-    type: Boolean,
-    default: false,
+  accountLabels: {
+    type: Array,
+    required: true,
   },
 });
 
-defineOptions({ inheritAttrs: false });
+const WIDTH_CONFIG = Object.freeze({
+  DEFAULT_WIDTH: 80,
+  CHAR_WIDTH: {
+    SHORT: 8, // For labels <= 5 chars
+    LONG: 6, // For labels > 5 chars
+  },
+  BASE_WIDTH: 12, // dot + gap
+  THRESHOLD: 5, // character length threshold
+});
 
-const attrs = useAttrs();
-const slots = useSlots();
-const { t } = useI18n();
-
-const accountLabels = useMapGetter('labels/getLabels');
+const containerRef = ref(null);
+const maxLabels = ref(1);
 
 const activeLabels = computed(() => {
-  return accountLabels.value.filter(({ title }) =>
-    props.labels.includes(title)
-  );
+  const labelSet = new Set(props.conversationLabels);
+  return props.accountLabels?.filter(({ title }) => labelSet.has(title));
 });
 
-const showAllLabels = ref(false);
-const showExpandLabelButton = ref(false);
-const labelPosition = ref(-1);
-const labelContainer = ref(null);
+const calculateLabelWidth = ({ title = '' }) => {
+  const charWidth =
+    title.length > WIDTH_CONFIG.THRESHOLD
+      ? WIDTH_CONFIG.CHAR_WIDTH.LONG
+      : WIDTH_CONFIG.CHAR_WIDTH.SHORT;
 
-// Show if there are labels OR if before slot exists
-const showSection = computed(
-  () => activeLabels.value.length > 0 || !!slots.before
-);
-
-const computeVisibleLabelPosition = () => {
-  const container = labelContainer.value;
-  if (!container || activeLabels.value.length === 0) {
-    showExpandLabelButton.value = false;
-    return;
-  }
-
-  const labels = container.querySelectorAll('[data-label]');
-  if (labels.length === 0) {
-    showExpandLabelButton.value = false;
-    return;
-  }
-
-  // Early exit if all labels are visible
-  if (showAllLabels.value) return;
-
-  const beforeSlot = container.querySelector('[data-before-slot]');
-  const beforeSlotWidth = beforeSlot?.offsetWidth ?? 0;
-  const availableWidth = container.clientWidth - 46 - beforeSlotWidth;
-
-  let totalWidth = 0;
-  const labelsArray = Array.from(labels);
-
-  // Find last visible label index using some() - stops early on overflow
-  const overflowIndex = labelsArray.findIndex(label => {
-    totalWidth += label.offsetWidth + 6;
-    return totalWidth > availableWidth;
-  });
-
-  const visibleIndex =
-    overflowIndex === -1 ? labelsArray.length - 1 : overflowIndex - 1;
-
-  labelPosition.value = visibleIndex;
-  showExpandLabelButton.value = visibleIndex < labelsArray.length - 1;
+  return title.length * charWidth + WIDTH_CONFIG.BASE_WIDTH;
 };
 
-const throttledCalculate = useThrottleFn(computeVisibleLabelPosition, 16);
+const getAverageWidth = labels => {
+  if (!labels.length) return WIDTH_CONFIG.DEFAULT_WIDTH;
 
-watch(activeLabels, () => nextTick(throttledCalculate), { immediate: true });
+  const totalWidth = labels.reduce(
+    (sum, label) => sum + calculateLabelWidth(label),
+    0
+  );
 
-const hiddenLabelsCount = computed(() => {
-  if (!showExpandLabelButton.value || showAllLabels.value) return 0;
-  return activeLabels.value.length - labelPosition.value - 1;
-});
+  return totalWidth / labels.length;
+};
 
-// Check if all labels are hidden (none visible)
-const allLabelsHidden = computed(() => {
-  return labelPosition.value === -1 && activeLabels.value.length > 0;
-});
+const visibleLabels = computed(() =>
+  activeLabels.value?.slice(0, maxLabels.value)
+);
 
-// Label text for button when disableToggle is true and all labels are hidden
-const labelsCountText = computed(() => {
-  if (props.disableToggle && allLabelsHidden.value) {
-    return t('CONVERSATION.CARD.LABELS_COUNT', {
-      count: activeLabels.value.length,
-    });
-  }
-  if (!showAllLabels.value && hiddenLabelsCount.value > 0) {
-    return hiddenLabelsCount.value;
-  }
-  return '';
-});
+const updateVisibleLabels = () => {
+  if (!containerRef.value) return;
 
-const hiddenLabelsTooltip = computed(() => {
-  if (!props.disableToggle) return '';
-  // When all labels are hidden, show all label titles
-  if (allLabelsHidden.value) {
-    return activeLabels.value.map(label => label.title).join(', ');
-  }
-  if (!showExpandLabelButton.value) return '';
-  const hiddenLabels = activeLabels.value.slice(labelPosition.value + 1);
-  return hiddenLabels.map(label => label.title).join(', ');
-});
+  const containerWidth = containerRef.value.offsetWidth;
+  const avgWidth = getAverageWidth(activeLabels.value);
 
-const tooltipText = computed(() => {
-  if (props.disableToggle && hiddenLabelsTooltip.value) {
-    return hiddenLabelsTooltip.value;
-  }
-  return showAllLabels.value
-    ? t('CONVERSATION.CARD.HIDE_LABELS')
-    : t('CONVERSATION.CARD.SHOW_LABELS');
-});
-
-const onShowLabels = e => {
-  e.stopPropagation();
-  if (props.disableToggle) return;
-  showAllLabels.value = !showAllLabels.value;
-  nextTick(() => computeVisibleLabelPosition());
+  maxLabels.value = Math.max(1, Math.floor(containerWidth / avgWidth));
 };
 </script>
 
 <template>
   <div
-    v-if="showSection"
-    ref="labelContainer"
-    v-bind="attrs"
-    v-resize="throttledCalculate"
-    data-labels-container
-    class="flex items-center flex-shrink min-w-0 min-h-6 gap-x-1.5 gap-y-1 [&:not(:has([data-label],[data-before-slot]))]:hidden"
-    :class="{ 'h-auto overflow-visible flex-row flex-wrap': showAllLabels }"
+    ref="containerRef"
+    v-resize="updateVisibleLabels"
+    class="flex items-center gap-2.5 w-full min-w-0 h-6 overflow-hidden"
   >
-    <slot name="before" />
-
-    <Label
-      v-for="(label, index) in activeLabels"
-      :key="label ? label.id : index"
-      data-label
-      :label="label"
-      compact
-      :class="{
-        'invisible absolute': !showAllLabels && index > labelPosition,
-      }"
-    />
-    <Button
-      v-if="showExpandLabelButton || (disableToggle && allLabelsHidden)"
-      v-tooltip.top="{
-        content: tooltipText,
-        delay: { show: 1000, hide: 0 },
-      }"
-      :label="labelsCountText"
-      xs
-      slate
-      :no-animation="disableToggle"
-      :icon="labelsCountText ? 'i-lucide-plus' : 'i-lucide-chevron-left'"
-      class="!py-0 !px-1.5 flex-shrink-0 !rounded-md !bg-n-button-color -outline-offset-1 !gap-0.5 [&>span:first-child]:!text-n-slate-10 [&>span:last-child]:!text-n-slate-11"
-      :class="{ 'cursor-default': disableToggle }"
-      @click="onShowLabels"
-    />
+    <template v-for="(label, index) in visibleLabels" :key="label.id">
+      <div
+        class="flex items-center gap-1.5 min-w-0"
+        :class="[
+          index !== visibleLabels.length - 1
+            ? 'flex-shrink-0 text-ellipsis'
+            : 'flex-shrink',
+        ]"
+      >
+        <div
+          :style="{ backgroundColor: label.color }"
+          class="size-1.5 rounded-full flex-shrink-0"
+        />
+        <span
+          class="text-sm text-n-slate-10 whitespace-nowrap"
+          :class="{ truncate: index === visibleLabels.length - 1 }"
+        >
+          {{ label.title }}
+        </span>
+      </div>
+    </template>
   </div>
-  <template v-else />
 </template>
diff --git a/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabelsV5.vue b/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabelsV5.vue
new file mode 100644
index 000000000..981ab32d4
--- /dev/null
+++ b/app/javascript/dashboard/components-next/Conversation/ConversationCard/CardLabelsV5.vue
@@ -0,0 +1,175 @@
+<script setup>
+import { ref, computed, nextTick, useSlots, watch, useAttrs } from 'vue';
+import { useI18n } from 'vue-i18n';
+import { useThrottleFn } from '@vueuse/core';
+import { useMapGetter } from 'dashboard/composables/store';
+
+import Button from 'dashboard/components-next/button/Button.vue';
+import Label from 'dashboard/components-next/label/Label.vue';
+
+const props = defineProps({
+  labels: {
+    type: Array,
+    default: () => [],
+  },
+  disableToggle: {
+    type: Boolean,
+    default: false,
+  },
+});
+
+defineOptions({ inheritAttrs: false });
+
+const attrs = useAttrs();
+const slots = useSlots();
+const { t } = useI18n();
+
+const accountLabels = useMapGetter('labels/getLabels');
+
+const activeLabels = computed(() => {
+  return accountLabels.value.filter(({ title }) =>
+    props.labels.includes(title)
+  );
+});
+
+const showAllLabels = ref(false);
+const showExpandLabelButton = ref(false);
+const labelPosition = ref(-1);
+const labelContainer = ref(null);
+
+// Show if there are labels OR if before slot exists
+const showSection = computed(
+  () => activeLabels.value.length > 0 || !!slots.before
+);
+
+const computeVisibleLabelPosition = () => {
+  const container = labelContainer.value;
+  if (!container || activeLabels.value.length === 0) {
+    showExpandLabelButton.value = false;
+    return;
+  }
+
+  const labels = container.querySelectorAll('[data-label]');
+  if (labels.length === 0) {
+    showExpandLabelButton.value = false;
+    return;
+  }
+
+  // Early exit if all labels are visible
+  if (showAllLabels.value) return;
+
+  const beforeSlot = container.querySelector('[data-before-slot]');
+  const beforeSlotWidth = beforeSlot?.offsetWidth ?? 0;
+  const availableWidth = container.clientWidth - 46 - beforeSlotWidth;
+
+  let totalWidth = 0;
+  const labelsArray = Array.from(labels);
+
+  // Find last visible label index using some() - stops early on overflow
+  const overflowIndex = labelsArray.findIndex(label => {
+    totalWidth += label.offsetWidth + 6;
+    return totalWidth > availableWidth;
+  });
+
+  const visibleIndex =
+    overflowIndex === -1 ? labelsArray.length - 1 : overflowIndex - 1;
+
+  labelPosition.value = visibleIndex;
+  showExpandLabelButton.value = visibleIndex < labelsArray.length - 1;
+};
+
+const throttledCalculate = useThrottleFn(computeVisibleLabelPosition, 16);
+
+watch(activeLabels, () => nextTick(throttledCalculate), { immediate: true });
+
+const hiddenLabelsCount = computed(() => {
+  if (!showExpandLabelButton.value || showAllLabels.value) return 0;
+  return activeLabels.value.length - labelPosition.value - 1;
+});
+
+// Check if all labels are hidden (none visible)
+const allLabelsHidden = computed(() => {
+  return labelPosition.value === -1 && activeLabels.value.length > 0;
+});
+
+// Label text for button when disableToggle is true and all labels are hidden
+const labelsCountText = computed(() => {
+  if (props.disableToggle && allLabelsHidden.value) {
+    return t('CONVERSATION.CARD.LABELS_COUNT', {
+      count: activeLabels.value.length,
+    });
+  }
+  if (!showAllLabels.value && hiddenLabelsCount.value > 0) {
+    return hiddenLabelsCount.value;
+  }
+  return '';
+});
+
+const hiddenLabelsTooltip = computed(() => {
+  if (!props.disableToggle) return '';
+  // When all labels are hidden, show all label titles
+  if (allLabelsHidden.value) {
+    return activeLabels.value.map(label => label.title).join(', ');
+  }
+  if (!showExpandLabelButton.value) return '';
+  const hiddenLabels = activeLabels.value.slice(labelPosition.value + 1);
+  return hiddenLabels.map(label => label.title).join(', ');
+});
+
+const tooltipText = computed(() => {
+  if (props.disableToggle && hiddenLabelsTooltip.value) {
+    return hiddenLabelsTooltip.value;
+  }
+  return showAllLabels.value
+    ? t('CONVERSATION.CARD.HIDE_LABELS')
+    : t('CONVERSATION.CARD.SHOW_LABELS');
+});
+
+const onShowLabels = e => {
+  e.stopPropagation();
+  if (props.disableToggle) return;
+  showAllLabels.value = !showAllLabels.value;
+  nextTick(() => computeVisibleLabelPosition());
+};
+</script>
+
+<template>
+  <div
+    v-if="showSection"
+    ref="labelContainer"
+    v-bind="attrs"
+    v-resize="throttledCalculate"
+    data-labels-container
+    class="flex items-center flex-shrink min-w-0 min-h-6 gap-x-1.5 gap-y-1 [&:not(:has([data-label],[data-before-slot]))]:hidden"
+    :class="{ 'h-auto overflow-visible flex-row flex-wrap': showAllLabels }"
+  >
+    <slot name="before" />
+
+    <Label
+      v-for="(label, index) in activeLabels"
+      :key="label ? label.id : index"
+      data-label
+      :label="label"
+      compact
+      :class="{
+        'invisible absolute': !showAllLabels && index > labelPosition,
+      }"
+    />
+    <Button
+      v-if="showExpandLabelButton || (disableToggle && allLabelsHidden)"
+      v-tooltip.top="{
+        content: tooltipText,
+        delay: { show: 1000, hide: 0 },
+      }"
+      :label="labelsCountText"
+      xs
+      slate
+      :no-animation="disableToggle"
+      :icon="labelsCountText ? 'i-lucide-plus' : 'i-lucide-chevron-left'"
+      class="!py-0 !px-1.5 flex-shrink-0 !rounded-md !bg-n-button-color -outline-offset-1 !gap-0.5 [&>span:first-child]:!text-n-slate-10 [&>span:last-child]:!text-n-slate-11"
+      :class="{ 'cursor-default': disableToggle }"
+      @click="onShowLabels"
+    />
+  </div>
+  <template v-else />
+</template>
diff --git a/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardCompact.vue b/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardCompact.vue
index f35c1cda7..581ad8c1d 100644
--- a/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardCompact.vue
+++ b/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardCompact.vue
@@ -6,7 +6,7 @@ import TimeAgo from 'dashboard/components/ui/TimeAgo.vue';
 import InboxName from 'dashboard/components-next/Conversation/InboxName.vue';
 import CardAvatar from './CardAvatar.vue';
 import CardContent from './CardContent.vue';
-import CardLabels from './CardLabels.vue';
+import CardLabels from './CardLabelsV5.vue';
 import CardPriorityIcon from './CardPriorityIcon.vue';
 import SLACardLabel from 'dashboard/components-next/Conversation/Sla/SLACardLabel.vue';
 
diff --git a/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardExpanded.vue b/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardExpanded.vue
index 85cf3fb03..6689affdc 100644
--- a/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardExpanded.vue
+++ b/app/javascript/dashboard/components-next/Conversation/ConversationCard/ConversationCardExpanded.vue
@@ -3,7 +3,7 @@ import { computed, useTemplateRef } from 'vue';
 import { getLastMessage } from 'dashboard/helper/conversationHelper';
 import CardAvatar from './CardAvatar.vue';
 import CardContent from './CardContent.vue';
-import CardLabels from './CardLabels.vue';
+import CardLabels from './CardLabelsV5.vue';
 import CardPriorityIcon from './CardPriorityIcon.vue';
 import InboxName from 'dashboard/components-next/Conversation/InboxName.vue';
 import Avatar from 'next/avatar/Avatar.vue';