1 Undervalued Stock That Could Rebound in 2026

At what point does the broad stock market cease to “look” expensive? Of course, the AI run-up has made for rather swollen valuation metrics in a wide number of names. And while the S&P 500 itself might be trading at a bit of a lofty premium, I’d also argue that there’s value out there.

The big issue is that the deepest value lies in areas where there’s quite a bit of fear. And, of course, there are value traps and falling knives that might not be ready for backing the truck up on. In any case, the market could stay historically expensive for some period of time, but before you stay sidelined amid the latest flatlining in the S&P, I’d argue that it makes sense to give the fallen lower-multiple plays a second look while they’re down and out.

It’s never easy to buy what’s out of favor, but if you want a shot at picking up a stock at a sizeable discount, that’s what value investors must do if they’re to come off the sidelines and into the game. Let’s look at a name that might be overdue for a bit of a comeback in the coming year or so.

With modest multiples, interesting catalysts ahead, and, perhaps most importantly, the confidence of some big-name analysts on the sell-side, perhaps the following stocks do represent real value in an arguably pricey market.

Adobe

First, let’s get into the deeper-value option with Adobe (NASDAQ:ADBE). The battered stock is close to 60% off its 2021 all-time highs. And while there has been a bit of near-term momentum, with shares gaining over 10% in the past week, there’s still fear and doubt about the company’s prospects in the AI era.

Adobe has exceptional AI of its own with its Sensei and Firefly products. But the floodgates have been opened for the competition, and it’s going to be tough to maintain subscriptions, at least in my view, when the costs of creative innovation are falling at the hands of AI. So, why bother with shares of Adobe at close to multi-year lows of $281 and change?

The negative AI thesis is getting old. The stock has been selling off for more than a year over fears of intensifying AI competition. Of course, the Anthropic agentic scare is doing the software firm no favors. While it’s hard to see what the future holds for Adobe and the rest of the fallen software firms, I do think the main narrative could shift from AI disruption to deep value.

It’s getting too cheap

Whenever the expectations bar has been lowered so much, it might not take much to soothe investors. The stock trades at 16.3 times trailing price-to-earnings (P/E). For such a great company, that’s an obscenely low price to pay, as Adobe fights to stay relevant in the age of agentics.

Early signs suggest Firefly is on the right track as it looks to give users more precision in the creative process. Arguably, it’s a money-maker that might turn Adobe into less of an AI victim and more of a winner that’s transitioning towards agents and AI-native tools.

Either way, count me as doubtful that Adobe will keep falling towards zero just because of a bit of AI competition. Though the agentic transition could become messy, I do think Adobe has what it takes to shift gears effectively from a seat model to a usage one.

Another reason to give Adobe the benefit of the doubt is the healthy amount of hedge fund buys made in the last quarter. Indeed, whenever the smart money sees value, investors should pay careful attention. Even if Firefly can’t outpace its rivals, the multiple, I think, already prices in its failure. Perhaps it’s time to go against the grain before the tides have a chance to turn.