Two Undervalued Growth Stocks Primed for Resurgence as AI Adoption Accelerates

While major market benchmarks like the S&P 500 and Nasdaq Composite are hovering near record levels, a different story is unfolding in the software-as-a-service sector. Growth stocks in this space have experienced a sharp pullback, with investors reassessing whether premium valuations remain justified in an AI-driven landscape. The question isn’t whether these companies deserve scrutiny—many SaaS valuations were indeed stretched going into 2026—but rather whether the market has overcorrected, creating genuine buying opportunities for contrarian investors.

After examining the current landscape, two growth stocks stand out as particularly compelling: Adobe and Intuit. Both have been hammered by recent selling pressure, with Adobe down 26% and Intuit down 39% year-to-date. Yet underneath these declines lies a paradox worth exploring: AI, often cited as a threat, is actually strengthening these companies’ competitive positions and revenue trajectories.

Adobe’s Valuation Gap: The Growth Story Beyond the Numbers

Adobe presents a fascinating case study in market mispricing. The creativity software giant trades at a price-to-earnings ratio of just 16, with forward valuations at 11—metrics that seem almost conservative for a company guiding toward double-digit growth. When the company reported its most recent quarter, revenues expanded 10% year-over-year, a respectable performance that CEO Shantanu Narayen attributed directly to “the expanding role in the global AI ecosystem and accelerating customer adoption of our AI-powered tools.”

What’s particularly noteworthy is management’s outlook. For fiscal 2026, Adobe projects annual recurring revenue will climb 10.2% year-over-year, with earnings-per-share guidance pointing toward 7.8% growth. These aren’t breakout numbers, but they’re solid—and the market’s treatment of the stock suggests investors are pricing in far worse outcomes.

The disconnect between modest but positive growth guidance and the stock’s beaten-down valuation reflects broader sector sentiment rather than fundamental deterioration. This creates a potential inflection point for patient investors willing to accumulate shares ahead of potential re-rating.

Intuit’s Expansion Story: Where AI Agents Drive Real Customer Value

Intuit occupies a different valuation tier, commanding a 28 P/E and 18 forward P/E multiple. Yet investors paying closer attention to recent operational performance understand why this premium may be justified. The company’s revenue growth accelerated to 18% year-over-year in its latest reported quarter, driven by broad strength across its product lineup.

Breaking down the dynamics: Credit Karma revenue jumped 27%, QuickBooks Online accounting services grew 25%, and broader online services expanded 17%. These aren’t isolated bright spots—they reflect company-wide momentum. Where this story gets more interesting is the AI dimension. Intuit has deployed AI agents designed to automate workflows and handle routine tasks for users. Launched only last summer, the uptake has already exceeded expectations, with 2.8 million customers actively leveraging these agents by the time of the latest earnings call. CEO Sasan Goodarzi emphasized this as “continuing momentum with our virtual team of AI agents.”

Looking ahead, Intuit projects full-year revenue growth between 12-13% with earnings-per-share expansion of 13-15%. The company is still early in its fiscal year, but the trajectory appears increasingly confident.

Understanding the Market’s Overcorrection

The broader SaaS sector has suffered from a narrative reversal. Early 2025 saw investors embrace these growth stocks at lofty valuations. When AI emerged as a transformative force, fear rippled through the market—uncertainty about competitive disruption and valuation sustainability triggered systematic selling across the group.

For many SaaS companies, this caution may have merit. But Adobe and Intuit demonstrate why blanket skepticism misses important nuances. These growth stocks aren’t threatened by AI adoption; they’re being enhanced by it. Both companies have successfully integrated AI capabilities into their core offerings and are seeing customer demand respond positively. Their challenges aren’t existential; they’re cyclical sentiment-driven.

The valuation compression, viewed through this lens, represents an opportunity rather than a capitulation signal. Market participants frequently overshoot in both directions, and the current despair pricing may not accurately reflect these companies’ medium-term prospects.

The Risk Perspective: What Could Go Wrong

Prudence demands acknowledging that neither situation is risk-free. AI remains a rapidly evolving landscape where competitive dynamics could shift unexpectedly. Should rival platforms accelerate AI-assisted product development, the moat surrounding Adobe and Intuit could narrow. Similarly, if AI tools become sufficiently sophisticated to enable do-it-yourself alternatives, customer willingness to pay for premium services might erode.

The technology dependency itself warrants caution. Both companies operate in environments where capabilities shift quickly and customer preferences can pivot rapidly. These are not defensive, stable-cash-flow businesses—they’re high-growth enterprises navigating technological transformation.

This context suggests investors should approach these growth stocks with eyes open about volatility and competitive risk. Any position should be sized appropriately given these dynamics, not treated as core holdings or concentrated bets.

The Strategic Opportunity

The current market environment presents a rare window where valuation compression and improving fundamentals align. Adobe’s depressed multiples alongside guidance for sustained double-digit ARR expansion, combined with Intuit’s strengthening customer engagement and broadening product momentum powered by AI adoption, create a scenario where current pricing likely underweights future earnings power.

For investors with conviction in AI as a genuine productivity enabler—rather than merely a threat vector—these growth stocks merit serious consideration as portfolio additions at present levels. The market’s fear may ultimately prove excessive, but confirmation will require patience and a willingness to hold through continued volatility.