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Five AI Stocks That Stumbled in 2025 But Could Rebound Strong in 2026

MarketDash Editorial Team
3 hours ago
While mega-cap tech stars dominated 2025, several quality AI-connected names fell behind. Now analysts say these laggards, trading at reasonable valuations, are positioning themselves for a comeback year in 2026.

The AI gold rush of 2025 created clear winners and equally clear stragglers. While the mega-cap favorites soared to new heights, a handful of quality names with legitimate AI credentials got left at the station. But here's the interesting part: several of these underperformers are now catching the attention of top analysts who see them as compelling opportunities heading into 2026.

These aren't moonshot penny stocks or speculative plays. They're established companies with real businesses, reasonable valuations compared to their peers, and growing AI strategies that analysts believe could finally gain traction in the year ahead. Let's dig into five stocks that had forgettable 2025 performances but might be worth a second look for 2026.

Apple: The Magnificent Seven Laggard Gets Ready to Sprint

Calling Apple Inc. (AAPL) an underdog feels strange, but the numbers don't lie. While the tech giant posted respectable year-to-date gains of 12.12%, it significantly trailed the Roundhill Magnificent Seven ETF (MAGS), which climbed 25.54% over the same period. For a company that usually sets the pace, falling behind the pack is notable.

The reasons are straightforward enough. Apple lagged its peers in the AI race, and trade tensions plus tariff headwinds created additional drag throughout the year. But Gene Munster, analyst and Managing Partner at Deepwater Asset Management, sees this changing dramatically. In his 2026 predictions newsletter earlier this month, Munster made a bold call: "Apple will be the best performing Mag 7 stock" during the first six months of 2026.

What's driving this optimism? Munster points to iPhone sales "exceeding expectations in the December and March quarters," alongside the launch of a revamped Siri before April 30. The combination of stronger hardware momentum and meaningful AI improvements could be exactly what Apple needs to reclaim its leadership position among the mega-caps.

From a valuation perspective, Apple looks more attractive than it has in recent memory compared to its Magnificent Seven peers. The stock scores high on Momentum and Quality metrics, with favorable price trends across short, medium, and long-term timeframes.

Adobe: Firefly Is Burning Bright, But Nobody Seems to Notice

Here's a puzzle: Adobe Inc. (ADBE) is seeing explosive growth in its AI tools, with generative AI credit usage across its product ecosystem jumping 3x over the past quarter. Yet the stock is down 19.77% year-to-date. How does that make sense?

The disconnect between Adobe's AI momentum and its stock performance has created what several analysts view as a genuine opportunity. JPMorgan Chase analysts highlighted the "stickiness" of Adobe's product ecosystem and maintained their "Overweight" rating with a price target of $520 per share. That represents a potential 46.97% upside from current levels.

Independent analyst Parkev Tatevosian, CFA, went even further on his YouTube channel, pegging the stock's fair value at $460 per share, or roughly 30% above where it trades today. His key observation? Adobe currently trades at just 15 times forward earnings, the lowest level in "many, many years."

Think about that for a moment. A company with dominant creative software, a sticky subscription base, and rapidly accelerating AI adoption is trading at bargain-basement valuations. The disconnect won't last forever. Either the AI growth story will fizzle, or the market will eventually recognize the value. Analysts are betting heavily on the latter scenario.

The stock scores poorly on Momentum and Value metrics in current market conditions, but shows favorable price trends in the short and medium terms, suggesting sentiment may be starting to shift.

Palo Alto Networks: Where Cybersecurity Meets AI

Dan Ives of Wedbush Securities declared last week that 2026 will be the year when "cybersecurity meets AI." During an appearance on CNBC's "Power Lunch," he specifically named Palo Alto Networks Inc. (PANW) and CrowdStrike Holdings Inc. (CRWD) as key beneficiaries of this convergence.

Unlike CrowdStrike, which had a strong year despite its mid-year challenges, Palo Alto's performance has been underwhelming. The stock is up just 4.27% year-to-date, essentially treading water. But Ives expects the company to ride the growing "AI and cybersecurity" wave significantly higher in 2026.

Morgan Stanley shares this enthusiasm. The firm named Palo Alto as one of its top picks for 2026, with analyst Meta Marshall calling it the "best idea for 2026" and adding that the stock was "too attractive to ignore at current prices," according to CNBC reporting.

Now, let's be honest about the valuation: Palo Alto trades at 49 times forward earnings, which is hardly cheap by traditional standards. Yet the analyst consensus price target sits at $225.32 per share, implying 19.56% upside from current levels. The bull case rests on the idea that AI-enhanced cybersecurity will command premium valuations, and Palo Alto's comprehensive platform positions it to capture outsized value.

The stock performs poorly on Momentum and Value metrics but does well on Growth, with an unfavorable price trend across short, medium, and long-term periods. It's a bet on the future, not the recent past.

Airbnb: First-Party Data in an AI World

Airbnb Inc. (ABNB) had a lackluster 2025, gaining just 4.06% year-to-date. The vacation rental platform delivered mixed earnings over recent quarters while increasing investments in new services and initiatives that haven't yet demonstrated clear traction. Not exactly the recipe for investor excitement.

But Brad Erickson of RBC Capital Markets sees something different when he looks at Airbnb heading into 2026. Earlier this month, he upgraded the stock to "Outperform" and raised his price target to $170 from $145, representing potential upside of 24.25%. He called it an "increasingly attractive brand monetization story."

The key insight? Airbnb has massive amounts of first-party consumer data, which Erickson believes will be highly valued in the "evolving consumer AI landscape." As AI agents become more sophisticated at planning travel and making recommendations, platforms with rich, proprietary data about consumer preferences and behavior could command significant advantages.

Beyond the AI angle, Erickson's research note highlighted more immediate catalysts: Airbnb's expansion into hotel bookings, plus short-term tailwinds from major events including the Milan Olympics and FIFA World Cup in 2026. These aren't game-changers by themselves, but they provide near-term momentum while the longer-term AI strategy develops.

The stock scores poorly on Momentum, Growth, and Value metrics currently, though it shows favorable price trends across short, medium, and long-term timeframes, suggesting technical improvement despite weak fundamentals.

Target: Betting Big on AI to Transform Retail

Target Corp. (TGT) has had a brutal year. The stock is down 27.44% year-to-date, hammered by declining foot traffic, tariff pressures, and inflation that squeezed its core consumer base. This is not a pretty chart.

But significant changes are underway. COO Michael Fiddelke takes over as CEO on February 1, 2026, bringing fresh leadership at a critical moment. The company is aggressively restructuring its supply chain to reduce tariff exposure, with plans to cut Chinese imports to 25% in the coming year, down from 60% in 2017. That's a massive operational shift.

Here's the AI angle that makes Target interesting: the retailer has expanded its partnership with OpenAI, the company behind ChatGPT, to unlock value and efficiencies across its operations. This isn't a publicity stunt. Target is betting that AI can fundamentally improve how a century-old brick-and-mortar retailer operates, from inventory management to personalized shopping experiences.

The valuation story is compelling. Target currently trades at just 12.76 times forward earnings. Compare that to Walmart Inc. (WMT) at 36.76 times and Costco Wholesale Corp. (COST) at 46.73 times. Yes, Target has execution challenges that partly justify the discount, but this is a massive gap for three retailers in similar businesses.

Joseph Feldman of Telsey Advisory Group maintained a "Market Perform" rating with a $110 price target, implying 10.49% upside. Not exactly fireworks, but remember this stock is down more than a quarter this year. Getting back to $110 would represent meaningful recovery.

Adding intrigue to the story, activist hedge fund Tom Capital Investment Management disclosed a sizable stake in Target last week, sparking a rally. Activist involvement often serves as a catalyst for unlocking shareholder value, particularly at undervalued companies with clear paths to operational improvement.

Target scores highly on Value metrics but performs poorly on Momentum and Quality. The stock shows favorable price trends in the short and medium terms, suggesting the worst may be behind it.

The Common Thread

What unites these five stocks is not just their underwhelming 2025 performance, but their positioning at the intersection of established businesses and emerging AI capabilities. They're not pure AI plays like chip designers or cloud infrastructure providers. Instead, they represent how AI is spreading into traditional sectors like consumer software, cybersecurity, travel, and retail.

The market spent 2025 rewarding the obvious AI winners. Perhaps 2026 will be the year it notices the companies quietly integrating AI into massive existing businesses, trading at valuations that don't yet reflect their potential. Or perhaps these stocks will continue to struggle, proving that AI hype doesn't automatically translate to shareholder returns.

Either way, analysts are making their bets. And after a year in the penalty box, these five companies are hoping 2026 brings redemption.

Back to Stock Market News

Five AI Stocks That Stumbled in 2025 But Could Rebound Strong in 2026

MarketDash Editorial Team
3 hours ago
While mega-cap tech stars dominated 2025, several quality AI-connected names fell behind. Now analysts say these laggards, trading at reasonable valuations, are positioning themselves for a comeback year in 2026.

The AI gold rush of 2025 created clear winners and equally clear stragglers. While the mega-cap favorites soared to new heights, a handful of quality names with legitimate AI credentials got left at the station. But here's the interesting part: several of these underperformers are now catching the attention of top analysts who see them as compelling opportunities heading into 2026.

These aren't moonshot penny stocks or speculative plays. They're established companies with real businesses, reasonable valuations compared to their peers, and growing AI strategies that analysts believe could finally gain traction in the year ahead. Let's dig into five stocks that had forgettable 2025 performances but might be worth a second look for 2026.

Apple: The Magnificent Seven Laggard Gets Ready to Sprint

Calling Apple Inc. (AAPL) an underdog feels strange, but the numbers don't lie. While the tech giant posted respectable year-to-date gains of 12.12%, it significantly trailed the Roundhill Magnificent Seven ETF (MAGS), which climbed 25.54% over the same period. For a company that usually sets the pace, falling behind the pack is notable.

The reasons are straightforward enough. Apple lagged its peers in the AI race, and trade tensions plus tariff headwinds created additional drag throughout the year. But Gene Munster, analyst and Managing Partner at Deepwater Asset Management, sees this changing dramatically. In his 2026 predictions newsletter earlier this month, Munster made a bold call: "Apple will be the best performing Mag 7 stock" during the first six months of 2026.

What's driving this optimism? Munster points to iPhone sales "exceeding expectations in the December and March quarters," alongside the launch of a revamped Siri before April 30. The combination of stronger hardware momentum and meaningful AI improvements could be exactly what Apple needs to reclaim its leadership position among the mega-caps.

From a valuation perspective, Apple looks more attractive than it has in recent memory compared to its Magnificent Seven peers. The stock scores high on Momentum and Quality metrics, with favorable price trends across short, medium, and long-term timeframes.

Adobe: Firefly Is Burning Bright, But Nobody Seems to Notice

Here's a puzzle: Adobe Inc. (ADBE) is seeing explosive growth in its AI tools, with generative AI credit usage across its product ecosystem jumping 3x over the past quarter. Yet the stock is down 19.77% year-to-date. How does that make sense?

The disconnect between Adobe's AI momentum and its stock performance has created what several analysts view as a genuine opportunity. JPMorgan Chase analysts highlighted the "stickiness" of Adobe's product ecosystem and maintained their "Overweight" rating with a price target of $520 per share. That represents a potential 46.97% upside from current levels.

Independent analyst Parkev Tatevosian, CFA, went even further on his YouTube channel, pegging the stock's fair value at $460 per share, or roughly 30% above where it trades today. His key observation? Adobe currently trades at just 15 times forward earnings, the lowest level in "many, many years."

Think about that for a moment. A company with dominant creative software, a sticky subscription base, and rapidly accelerating AI adoption is trading at bargain-basement valuations. The disconnect won't last forever. Either the AI growth story will fizzle, or the market will eventually recognize the value. Analysts are betting heavily on the latter scenario.

The stock scores poorly on Momentum and Value metrics in current market conditions, but shows favorable price trends in the short and medium terms, suggesting sentiment may be starting to shift.

Palo Alto Networks: Where Cybersecurity Meets AI

Dan Ives of Wedbush Securities declared last week that 2026 will be the year when "cybersecurity meets AI." During an appearance on CNBC's "Power Lunch," he specifically named Palo Alto Networks Inc. (PANW) and CrowdStrike Holdings Inc. (CRWD) as key beneficiaries of this convergence.

Unlike CrowdStrike, which had a strong year despite its mid-year challenges, Palo Alto's performance has been underwhelming. The stock is up just 4.27% year-to-date, essentially treading water. But Ives expects the company to ride the growing "AI and cybersecurity" wave significantly higher in 2026.

Morgan Stanley shares this enthusiasm. The firm named Palo Alto as one of its top picks for 2026, with analyst Meta Marshall calling it the "best idea for 2026" and adding that the stock was "too attractive to ignore at current prices," according to CNBC reporting.

Now, let's be honest about the valuation: Palo Alto trades at 49 times forward earnings, which is hardly cheap by traditional standards. Yet the analyst consensus price target sits at $225.32 per share, implying 19.56% upside from current levels. The bull case rests on the idea that AI-enhanced cybersecurity will command premium valuations, and Palo Alto's comprehensive platform positions it to capture outsized value.

The stock performs poorly on Momentum and Value metrics but does well on Growth, with an unfavorable price trend across short, medium, and long-term periods. It's a bet on the future, not the recent past.

Airbnb: First-Party Data in an AI World

Airbnb Inc. (ABNB) had a lackluster 2025, gaining just 4.06% year-to-date. The vacation rental platform delivered mixed earnings over recent quarters while increasing investments in new services and initiatives that haven't yet demonstrated clear traction. Not exactly the recipe for investor excitement.

But Brad Erickson of RBC Capital Markets sees something different when he looks at Airbnb heading into 2026. Earlier this month, he upgraded the stock to "Outperform" and raised his price target to $170 from $145, representing potential upside of 24.25%. He called it an "increasingly attractive brand monetization story."

The key insight? Airbnb has massive amounts of first-party consumer data, which Erickson believes will be highly valued in the "evolving consumer AI landscape." As AI agents become more sophisticated at planning travel and making recommendations, platforms with rich, proprietary data about consumer preferences and behavior could command significant advantages.

Beyond the AI angle, Erickson's research note highlighted more immediate catalysts: Airbnb's expansion into hotel bookings, plus short-term tailwinds from major events including the Milan Olympics and FIFA World Cup in 2026. These aren't game-changers by themselves, but they provide near-term momentum while the longer-term AI strategy develops.

The stock scores poorly on Momentum, Growth, and Value metrics currently, though it shows favorable price trends across short, medium, and long-term timeframes, suggesting technical improvement despite weak fundamentals.

Target: Betting Big on AI to Transform Retail

Target Corp. (TGT) has had a brutal year. The stock is down 27.44% year-to-date, hammered by declining foot traffic, tariff pressures, and inflation that squeezed its core consumer base. This is not a pretty chart.

But significant changes are underway. COO Michael Fiddelke takes over as CEO on February 1, 2026, bringing fresh leadership at a critical moment. The company is aggressively restructuring its supply chain to reduce tariff exposure, with plans to cut Chinese imports to 25% in the coming year, down from 60% in 2017. That's a massive operational shift.

Here's the AI angle that makes Target interesting: the retailer has expanded its partnership with OpenAI, the company behind ChatGPT, to unlock value and efficiencies across its operations. This isn't a publicity stunt. Target is betting that AI can fundamentally improve how a century-old brick-and-mortar retailer operates, from inventory management to personalized shopping experiences.

The valuation story is compelling. Target currently trades at just 12.76 times forward earnings. Compare that to Walmart Inc. (WMT) at 36.76 times and Costco Wholesale Corp. (COST) at 46.73 times. Yes, Target has execution challenges that partly justify the discount, but this is a massive gap for three retailers in similar businesses.

Joseph Feldman of Telsey Advisory Group maintained a "Market Perform" rating with a $110 price target, implying 10.49% upside. Not exactly fireworks, but remember this stock is down more than a quarter this year. Getting back to $110 would represent meaningful recovery.

Adding intrigue to the story, activist hedge fund Tom Capital Investment Management disclosed a sizable stake in Target last week, sparking a rally. Activist involvement often serves as a catalyst for unlocking shareholder value, particularly at undervalued companies with clear paths to operational improvement.

Target scores highly on Value metrics but performs poorly on Momentum and Quality. The stock shows favorable price trends in the short and medium terms, suggesting the worst may be behind it.

The Common Thread

What unites these five stocks is not just their underwhelming 2025 performance, but their positioning at the intersection of established businesses and emerging AI capabilities. They're not pure AI plays like chip designers or cloud infrastructure providers. Instead, they represent how AI is spreading into traditional sectors like consumer software, cybersecurity, travel, and retail.

The market spent 2025 rewarding the obvious AI winners. Perhaps 2026 will be the year it notices the companies quietly integrating AI into massive existing businesses, trading at valuations that don't yet reflect their potential. Or perhaps these stocks will continue to struggle, proving that AI hype doesn't automatically translate to shareholder returns.

Either way, analysts are making their bets. And after a year in the penalty box, these five companies are hoping 2026 brings redemption.