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2 Great Tech Stocks to Buy Now Down 65% and 35%: ADBE, MSFT
Key Takeaways
AI fears sent Adobe down 65%. Yet its growth outlook has the stock trading at its lowest P/E since 2009.
MSFT trades 35% below its highs and at its lowest P/E since 2016.
Artificial intelligence expansion and innovations rocked software stocks in the first quarter of 2026. Wall Street is worried about rapid AI advancements and their long-term impacts on established software giants such as Adobe.
Meanwhile, investors have also, perhaps to less fanfare, sold off some of the AI hyperscalers to start 2026 as they worry their massive AI capex spending plans aren’t paying off quickly enough.
Microsoft, for instance, is down roughly 35% from its all-time highs as the market punishes it for huge AI data center spending and the potentially worrisome portion of its revenue backlog tied to its OpenAI partnership.
The selloffs might be overdone for both Adobe and Microsoft. Even if investors are unsure about how AI will disrupt their businesses in the long run, both ADBE and MSFT are established tech titans that are trading at their lowest forward earnings multiples in 10 years, or more in Adobe's case.
On top of that, they are both landing support at key long-term moving averages that might make long-term investors want to start at least a small position, given the huge upside.
Image Source: Zacks Investment Research
To paraphrase the old saying: it’s time to be a bit greedy and buy strong stocks when others are fearful and selling them.
Buy Tech Stock ADBE for Value, AI Growth, and 180% Upside Potential
Adobe’s (ADBE - Free Report) industry-leading creative software has been used by everyone from Hollywood movie studios and best-selling artists to college students and multibillion-dollar companies for years.
Its wide-ranging, best-in-class subscription-based creative software helped it achieve seven consecutive years of 16% to 25% revenue growth from 2015 to 2021, taking it from under $5 billion in annual sales to ~$16 billion during that period.
Image Source: Zacks Investment Research
Adobe’s growth has cooled since then, as the sheer size of its sales has made those huge YoY percentage gains more difficult to achieve. It also got dinged a bit by increased competition from AI upstarts that help people create videos, marketing campaigns, and more with a few prompts.
But ADBE has not simply rolled over. Instead, it’s rolled out AI offerings throughout its best-in-class creative software portfolio to great success. It's growth remained highly impressive, averaging nearly 11% sales growth between 2022 and 2025, including 10.5% in fiscal 2025. Adobe also grew its GAAP earnings per share by 35% last year.
Image Source: Zacks Investment Research
Most recently, it grew its Q1 FY26 subscription revenue by 13% while more than tripling its “AI-first” annualized recurring revenue. Adobe provided upbeat guidance for Q2 as its “mission to empower everyone to create represents an even larger opportunity as content powers all experiences in the AI era.”
ADBE is projected to expand its revenue by another 10% in FY26 and 9% in FY27. Meanwhile, it is projected to expand its adjusted EPS by over 12% in FY26 and FY27. It has topped our EPS estimate for five years running, and the chart above highlights its strong long-term earnings growth outlook.
Image Source: Zacks Investment Research
Adobe’s selloff, mixed with its strong earnings growth outlook, has it trading at 12.0X forward 12-month earnings. ADBE trades at its lowest forward P/E since the 2008 financial crisis, representing a 45% discount to Tech and 65% value vs. its 20-year median.
ADBE stock also found support at its 200-month moving recently as it trades at its most oversold RSI levels since 2009. Its average Zacks price target offers 40% upside from its current levels. Plus, it would need to climb over 180% if it were to ever return to its all-time highs from 2021.
Buy Mag 7 Stock MSFT Down 35% and Hold Forever?
Magnificent 7 stock and technology royalty Microsoft (MSFT - Free Report) has tumbled 35% from its October 2025 peaks. There are various reasons for the selloff, but the simple case boils down to its AI data center spending spree and broader unknowns around AI and its impact on its software business.
Wall Street has punished MSFT for its AI data center spending spree, which is set to grow in 2026, along with fears that too much of its backlog is tied to its growing OpenAI partnership.
Image Source: Zacks Investment Research
Investors have also cited disappointing growth from its all-important Azure cloud services segment that helped it transform into the juggernaut it is today. Still, MSFT is actively rolling out its own AI features throughout its business software that remains nearly ubiquitous. Plus, it grew its revenue by around 15% in FY25 and FY24, with its GAAP earnings expanding by an average of 19%.
Microsoft posted a solid beat-and-raise Q2 FY26 report at the end of January, with its Intelligent Cloud revenue up 29% to $32.9 billion, driven by a 39% surge in Azure and other cloud services growth. It also boosted its Microsoft 365 -heavy Productivity and Business Processes sales by 17%. MSFT expanded its GAAP earnings by a whopping 60% and its adjusted EPS by 24%.
Image Source: Zacks Investment Research
Looking ahead, Microsoft is projected to grow its FY26 revenue by 16% and 14% in FY27 to reach $374 billion, adding over $90 billion to the top-line between FY25 and FY27. It’s projected to expand its adjusted EPS by 25% and 10%, respectively. “We are only at the beginning phases of AI diffusion, and already Microsoft has built an AI business that is larger than some of our biggest franchises," CEO Satya Nadella said in a Q2 release.
Microsoft is down roughly 35% from its October (and August) peaks. The tech stock recently found support at its 50-month MA, and it is attempting to hold firm at its 200-week (a favorite of Charlie Munger, Warren Buffett’s longtime right-hand man), which it has several times in the past five years.
MSFT could also hold firm at its 2021 highs, as it hits its most oversold RSI levels in over a decade. Its average Zacks price target offers 61% upside from Microsoft's current price.
Image Source: Zacks Investment Research
On the valuation front, MSFT trades at its lowest forward P/E since 2016 at 20.2X forward 12-month earnings. This also marks a 25% discount to its 10-year median and 45% value against its highs and is nearly in line with Tech—even though it has climbed 540% in the past 10 years vs. Tech’s 370%. MSFT also pays a dividend and buys back a ton of stock with its mountains of cash.
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2 Great Tech Stocks to Buy Now Down 65% and 35%: ADBE, MSFT
Key Takeaways
Artificial intelligence expansion and innovations rocked software stocks in the first quarter of 2026. Wall Street is worried about rapid AI advancements and their long-term impacts on established software giants such as Adobe.
Meanwhile, investors have also, perhaps to less fanfare, sold off some of the AI hyperscalers to start 2026 as they worry their massive AI capex spending plans aren’t paying off quickly enough.
Microsoft, for instance, is down roughly 35% from its all-time highs as the market punishes it for huge AI data center spending and the potentially worrisome portion of its revenue backlog tied to its OpenAI partnership.
The selloffs might be overdone for both Adobe and Microsoft. Even if investors are unsure about how AI will disrupt their businesses in the long run, both ADBE and MSFT are established tech titans that are trading at their lowest forward earnings multiples in 10 years, or more in Adobe's case.
On top of that, they are both landing support at key long-term moving averages that might make long-term investors want to start at least a small position, given the huge upside.
Image Source: Zacks Investment Research
To paraphrase the old saying: it’s time to be a bit greedy and buy strong stocks when others are fearful and selling them.
Buy Tech Stock ADBE for Value, AI Growth, and 180% Upside Potential
Adobe’s (ADBE - Free Report) industry-leading creative software has been used by everyone from Hollywood movie studios and best-selling artists to college students and multibillion-dollar companies for years.
Its wide-ranging, best-in-class subscription-based creative software helped it achieve seven consecutive years of 16% to 25% revenue growth from 2015 to 2021, taking it from under $5 billion in annual sales to ~$16 billion during that period.
Image Source: Zacks Investment Research
Adobe’s growth has cooled since then, as the sheer size of its sales has made those huge YoY percentage gains more difficult to achieve. It also got dinged a bit by increased competition from AI upstarts that help people create videos, marketing campaigns, and more with a few prompts.
But ADBE has not simply rolled over. Instead, it’s rolled out AI offerings throughout its best-in-class creative software portfolio to great success. It's growth remained highly impressive, averaging nearly 11% sales growth between 2022 and 2025, including 10.5% in fiscal 2025. Adobe also grew its GAAP earnings per share by 35% last year.
Image Source: Zacks Investment Research
Most recently, it grew its Q1 FY26 subscription revenue by 13% while more than tripling its “AI-first” annualized recurring revenue. Adobe provided upbeat guidance for Q2 as its “mission to empower everyone to create represents an even larger opportunity as content powers all experiences in the AI era.”
ADBE is projected to expand its revenue by another 10% in FY26 and 9% in FY27. Meanwhile, it is projected to expand its adjusted EPS by over 12% in FY26 and FY27. It has topped our EPS estimate for five years running, and the chart above highlights its strong long-term earnings growth outlook.
Image Source: Zacks Investment Research
Adobe’s selloff, mixed with its strong earnings growth outlook, has it trading at 12.0X forward 12-month earnings. ADBE trades at its lowest forward P/E since the 2008 financial crisis, representing a 45% discount to Tech and 65% value vs. its 20-year median.
ADBE stock also found support at its 200-month moving recently as it trades at its most oversold RSI levels since 2009. Its average Zacks price target offers 40% upside from its current levels. Plus, it would need to climb over 180% if it were to ever return to its all-time highs from 2021.
Buy Mag 7 Stock MSFT Down 35% and Hold Forever?
Magnificent 7 stock and technology royalty Microsoft (MSFT - Free Report) has tumbled 35% from its October 2025 peaks. There are various reasons for the selloff, but the simple case boils down to its AI data center spending spree and broader unknowns around AI and its impact on its software business.
Wall Street has punished MSFT for its AI data center spending spree, which is set to grow in 2026, along with fears that too much of its backlog is tied to its growing OpenAI partnership.
Image Source: Zacks Investment Research
Investors have also cited disappointing growth from its all-important Azure cloud services segment that helped it transform into the juggernaut it is today. Still, MSFT is actively rolling out its own AI features throughout its business software that remains nearly ubiquitous. Plus, it grew its revenue by around 15% in FY25 and FY24, with its GAAP earnings expanding by an average of 19%.
Microsoft posted a solid beat-and-raise Q2 FY26 report at the end of January, with its Intelligent Cloud revenue up 29% to $32.9 billion, driven by a 39% surge in Azure and other cloud services growth. It also boosted its Microsoft 365 -heavy Productivity and Business Processes sales by 17%. MSFT expanded its GAAP earnings by a whopping 60% and its adjusted EPS by 24%.
Image Source: Zacks Investment Research
Looking ahead, Microsoft is projected to grow its FY26 revenue by 16% and 14% in FY27 to reach $374 billion, adding over $90 billion to the top-line between FY25 and FY27. It’s projected to expand its adjusted EPS by 25% and 10%, respectively. “We are only at the beginning phases of AI diffusion, and already Microsoft has built an AI business that is larger than some of our biggest franchises," CEO Satya Nadella said in a Q2 release.
Microsoft is down roughly 35% from its October (and August) peaks. The tech stock recently found support at its 50-month MA, and it is attempting to hold firm at its 200-week (a favorite of Charlie Munger, Warren Buffett’s longtime right-hand man), which it has several times in the past five years.
MSFT could also hold firm at its 2021 highs, as it hits its most oversold RSI levels in over a decade. Its average Zacks price target offers 61% upside from Microsoft's current price.
Image Source: Zacks Investment Research
On the valuation front, MSFT trades at its lowest forward P/E since 2016 at 20.2X forward 12-month earnings. This also marks a 25% discount to its 10-year median and 45% value against its highs and is nearly in line with Tech—even though it has climbed 540% in the past 10 years vs. Tech’s 370%. MSFT also pays a dividend and buys back a ton of stock with its mountains of cash.