In this article, we will discuss the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds.
The uncertainty related to the tariff announcements continues to influence Wall Street. Reuters reported that the S&P 500 is down 4.3% since Trump took office on January 20, and tariffs are the main concern for investors as they believe that can adversely impact the economic growth and be inflationary. While Trump believes that tariffs can increase the country’s revenue, fuel broad-based growth, and can be used as a negotiating tool with other countries, the investors believe that trade policies can weaken consumer confidence and limit the capital spending from companies.
Long Term Outlook Remains Intact
As per Franklin Templeton, the US equities have managed to provide strong gains over the past few years, with the S&P 500 repeatedly touching record highs, thanks to the Magnificent Seven’s dominance in AI. Despite elevated valuations, the broader market outlook is positive. Innovation and investment continue at a pace, sales growth has been accelerating, and earnings are expected to see a double-digit rise this year. Also, the US economy has a more business-friendly administration. That being said, there are risks, mainly related to the US trade policy and the expected impact of tariffs on critical sectors, including technology.
Amidst such uncertainties, Franklin Templeton believes that investor confidence in the US equities is expected to remain strong. While the risks might be elevated, the new administration’s policy changes are expected to finally result in long-term positives for the broader US economy.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Blue Chips to Provide Shelter
While the Mag 7 stocks are well-placed for the long-term growth, the market leadership is expected to broaden as and when acceleration in innovation occurs, says Franklin Templeton. The investment firm believes that active management is of utmost importance. The pivot from AI infrastructure to platforms remains well underway. Therefore, identifying the right companies at the right time—ones possessing the technology, strategy, and adaptability to maintain and sustain long-term growth—are expected to be critical to investment success.
The US equities, mainly large caps, have been performing strongly, courtesy of the innovation and investment. Notably, over the past 6 months, the Dow Jones Industrial Average has seen an increase of over ~4.5%. Even though the Mag 7 stocks continue to support the market momentum, the investment firm sees growing opportunities beyond such market leaders. With the continuation of AI-driven cycle, the competitive landscape remains dynamic and has been creating new growth areas.
Amidst these trends, let us now have a look at the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds.
An executive of the company viewing a portfolio of investment grade municipal obligations.
Our Methodology
To list the 11 Oversold Blue Chip Stocks to Buy According to Hedge Funds, we used a screener and the SPDR S&P 500 ETF to shortlist the companies that have declined over the past year. Next, we chose the stocks that are popular among hedge funds, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11 Oversold Blue Chip Stocks to Buy According to Hedge Funds
11. Edison International (NYSE:EIX)
% Decline Over Past One Year: ~18.7%
Number of Hedge Fund Holders: 38
Market Cap as on March 7: $21.7 billion
Edison International (NYSE:EIX) is engaged in generation and distribution of electric power. Mizuho Securities analyst Anthony Crowdell reiterated the bullish stance on the company’s stock, providing a “Buy” rating on February 27. The analyst’s rating is backed by factors such as the company’s healthy 2025 guidance and its efforts to address wildfire-related challenges. Edison International (NYSE:EIX) has revised its 2025 core EPS guidance of $5.94-$6.34.
Despite uncertainties, the company’s management reflected prudent actions that can potentially mitigate financial impacts. Looking ahead, Edison International (NYSE:EIX)’s management exhibited confidence in achieving 2025 EPS guidance, with projections of 5% – 7% core EPS compound annual growth rate through 2028. Edison International (NYSE:EIX) remains focused on continuing its investments in grid hardening and distribution system expansion.
The company’s growth strategy focuses on California’s clean energy transition and electrification goals. Edison International (NYSE:EIX) is well-placed to benefit from the expansion of electric vehicles (EVs) and overall electrification trends within SCE’s service territory. ClearBridge Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“From a sector perspective, meanwhile, our utilities overweight was positive, with Edison International (NYSE:EIX) our top individual contributor. The company reached a tentative deal to recoup $1.7 billion of wildfire and mudslide expenses in California, bolstering its balance sheet, increasing earnings and demonstrating the favorable regulatory environment in California, benefiting both Edison as well as Sempra, our largest utility holding. Another rate-sensitive area — real estate — was the second-best sector performer as rate cuts boosted valuations in this area. Our REITs underweight, however, was a headwind during the period.”
10. Airbnb, Inc. (NASDAQ:ABNB)
% Decline Over Past 1 Year: ~17.5%
Number of Hedge Fund Holders: 54
Market Cap as on March 7: $84.7 billion
Airbnb, Inc. (NASDAQ:ABNB) is engaged in operating a platform that enables hosts to offer stays and experiences to guests. Susquehanna upped the company’s price target to $200 from $160, keeping a “Positive” rating. As per the firm, they posted a strong Q4 2024, thanks to the healthy travel demand and certain internal product improvements. In Q4 2024, Airbnb, Inc. (NASDAQ:ABNB)’s revenue came in at $2.5 billion, reflecting an increase of 12% YoY. As per the analyst, while the outlook was a bit below expectations, mainly because of calendar effects and FX headwinds, management demonstrated that favourable demand trends continued into 2025.
Elsewhere, Bernstein increased the target price to $185 from $158, keeping an “Outperform” rating on Airbnb, Inc. (NASDAQ:ABNB)’s stock post the Q4 2024 print. The firm believes that 2025 is the year in which Airbnb, Inc. (NASDAQ:ABNB) will start its journey to add products over and above its core business, all with billion-plus potential. Amanda Tan, an analyst from DBS, maintained a “Hold” rating, with the price target of $150.00. Despite the challenges, the company’s disciplined operational model and growth potential in new markets aid the analyst’s rating, implying a balanced view of the risks and opportunities.
Oakmark Funds, advised by Harris Associates, released its Q4 2024 investor letter. Here is what the fund said:
“Airbnb, Inc. (NASDAQ:ABNB) is an online marketplace to list, discover and book unique accommodations worldwide. The company benefits from a strong network effect between its guests and hosts. We believe there is a long growth runway as global travel is an attractive market, and alternative accommodations have been taking share. We anticipate Airbnb will drive further growth by creating more valuable services for both sides of its network, which includes the potential for paid placement, which has created significant economic value for comparable market places. In our view, management is aligned shareholders and well qualified to lead Airbnb as the company attempts to capture these growth opportunities. Short-term concerns about the macro travel environment and declining margins stemming from growth investments allowed us to purchase shares at a discount to our estimate of business value.”
9. Cadence Design Systems, Inc. (NASDAQ:CDNS)
% Decline Over Past 1 Year: ~20%
Number of Hedge Fund Holders: 59
Market Cap as on March 7: $66.6 billion
Cadence Design Systems, Inc. (NASDAQ:CDNS) offers software, hardware, and other services. Charles Shi, an analyst from Needham, maintained a “Buy” rating on the company’s stock, with the same price target of $325.00. The rating was backed by factors affecting the company’s future performance. As per the analyst, the specific segments such as IP and SD&A are projected to outperform Cadence Design Systems, Inc. (NASDAQ:CDNS)’s average growth rate, demonstrating potential for high-teens and mid-teens growth, respectively. Despite the expectation of core EDA segment underperforming, and the China market outlook remaining flat, the overall business trajectory remains positive, opines Shi.
Elsewhere, analyst Vivek Arya of Bank of America Securities maintained a “Buy” rating on the company’s stock. This rating stems from the factors highlighting Cadence Design Systems, Inc. (NASDAQ:CDNS)’s strategic positioning in the broader market. One of the critical reasons is its unique leverage in addressing the chip complexity and surge in AI design processes, which remain critical growth areas in the semiconductor industry. The analyst further added that Cadence Design Systems, Inc. (NASDAQ:CDNS)’s strong backlog, strength of its hardware portfolio, and the integration of recent acquisitions continue to paint a favourable outlook. Also, the company has been expanding its FCF margins, which can grow further, highlighting its financial resilience and efficiency.
8. First Solar, Inc. (NASDAQ:FSLR)
% Decline Over Past One Year: ~14.2%
Number of Hedge Fund Holders: 65
Market Cap as on March 7: $14.8 billion
First Solar, Inc. (NASDAQ:FSLR) is a solar technology company, which is engaged in providing photovoltaic (PV) solar energy solutions. Analyst Ameet Thakkar from BMO Capital reiterated a “Buy” rating on the company’s stock. The rating stemmed from factors reflecting the company’s potential for growth and value. As per the analyst, the favourable outlook on revenue is expected to help take some pressure off First Solar, Inc. (NASDAQ:FSLR)’s stock price over the short term. Furthermore, the analyst opines that the factors impacting margins, including increased logistics costs, are temporary.
Elsewhere, analyst Jeff Osborne of TD Cowen also maintained a “Buy” rating on the company’s stock, retaining the price objective of $275.00. As per the analyst, First Solar, Inc. (NASDAQ:FSLR)’s CuRe launch continues to progress as planned, and there is stability in the average selling price in the backlog, aiding future revenue. Overall, the analyst believes that any sort of weakness in the stock can be considered as a buying opportunity, considering First Solar, Inc. (NASDAQ:FSLR)’s strategic initiatives and long-term growth potential.
The solar industry, mainly First Solar, Inc. (NASDAQ:FSLR), is significantly influenced by government policies and regulations. The company appears to be well-positioned to benefit from the policies because of its strong US manufacturing presence. For 2025, the company expects net sales in the range of $5.3 billion – $5.8 billion, and gross margin of between $2.45 billion – $2.75 billion.
7. Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN)
% Decline Over Past One Year: ~26%
Number of Hedge Fund Holders: 68
Market Cap as on March 7: $77.3 billion
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) is engaged in discovering, inventing, developing, manufacturing, and commercializing medicines for treating various diseases. Analyst John Newman from Canaccord Genuity maintained a “Buy” rating on the company’s stock, keeping the price target at $1,152.00. The analyst’s rating was backed by factors highlighting the company’s promising developments and strategic positioning. The recent data on DB-OTO, a treatment for hearing loss, demonstrated significant efficacy throughout various age groups, says the analyst. Furthermore, the analyst added that DB-OTO showcased a favorable safety profile, improving its appeal as a viable treatment option.
Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) has also announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending conditional marketing authorization of linvoseltamab to treat adults having relapsed and refractory (R/R) multiple myeloma (MM). Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) highlighted that there are more than 35,000 new cases of MM diagnosed in Europe and 187,000 new cases of MM diagnosed globally every year. The company’s financial and commercial strength enables it for continued investment in its industry-leading R&D pipeline.
Baron Funds, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“We purchased Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN), a biopharmaceutical company that was built on a foundation in basic scientific research and antibody development. The company has successfully developed several blockbuster medicines, including Eylea and Eylea HD for retinal diseases (such as wet age-related macular degeneration, diabetic macular edema, and diabetic retinopathy) and Dupixent for immunological and inflammatory diseases (such as atopic dermatitis, asthma, and COPD). While Eylea is nearing the end of its patent life and faces potential biosimilar competition, the company has been transitioning patients to Eylea HD, which is a higher dose, longer-acting formulation of Eylea, and Dupixent is growing rapidly through indication expansion. Beyond the current product portfolio, Regeneron has an exciting new product pipeline with over 35 candidates in various stages of development, including a novel treatment for treating severe food allergy, a combination checkpoint inhibitor therapy for melanoma, lung cancer and other solid tumors, biospecific antibodies for blood cancers, and Factor XI antibodies for blood clot prevention, among others. Based on Regeneron’s track record of success discovering and developing new drugs, we are optimistic the pipeline will deliver some successes, which we think will drive upside in the stock.”
6. Synopsys, Inc. (NASDAQ:SNPS)
% Decline Over Past 1 Year: ~20%
Number of Hedge Fund Holders: 72
Market Cap as on March 7: $69.7 billion
Synopsys, Inc. (NASDAQ:SNPS) offers electronic design automation software products used to design and test integrated circuits. Needham analyst Charles Shi has maintained the bullish stance on the company’s stock, giving a “Buy” rating. The analyst’s rating is backed by factors that revolve around its recent performance and future outlook. Synopsys, Inc. (NASDAQ:SNPS) has maintained its financial guidance. For FY 2025, it expects revenue in the range of $6,745 million – $6,805 million.
As per the analyst, the consistency is regarded as a positive indicator, even as Synopsys, Inc. (NASDAQ:SNPS) expects a decrease in revenue from China. The analyst also noted the market’s current pricing of Intel-related risks into the company’s stock. The pricing adjustment results in enhancing the stock’s risk/reward profile, making it attractive. Elsewhere, Morgan Stanley analyst Lee Simpson maintained a “Buy” rating on Synopsys, Inc. (NASDAQ:SNPS)’s stock, setting a price target of $590.00.
This rating highlights the company’s strong performance and strategic positioning. As per the analyst, despite the slowing growth in China, Synopsys, Inc. (NASDAQ:SNPS) demonstrated strength in other areas, mainly in its hardware segment, which supported it in maintaining its FY 2025 guidance. Parnassus Investments, an investment management company, released the Q3 2024 investor letter. Here is what the fund said:
“Synopsys, Inc. (NASDAQ:SNPS) plays a crucial role in optimizing semiconductor processing power beyond physical design limits. It benefits from companies like Google and Amazon designing their own chips and the proliferation of AI accelerator development. Its proprietary EDA technology and rising demand for custom chips and AI accelerators should drive durable revenue and earnings growth.”
5. CVS Health Corporation (NYSE:CVS)
% Decline Over Past 1 Year: ~12.6%
Number of Hedge Fund Holders: 74
Market Cap as on March 7: $83.6 billion
CVS Health Corporation (NYSE:CVS) offers health solutions in the US. The company had its stock upgraded by an analyst after it surpassed the quarterly profit expectations by a wide margin, and as it continues to make strides in its pharmacy-benefit-manager business. Leerink Partners analyst Michael Cherny upped the rating on CVS Health Corporation (NYSE:CVS)’s stock to “Buy” from “Market perform,” increasing the price target to $75. As per the analyst, the company continues to benefit from stabilization in its Aetna health-insurance and pharmacy-benefits businesses. In Q4 2024, the company’s GAAP diluted EPS came in at $1.30 and adjusted EPS was $1.19.
CVS Health Corporation (NYSE:CVS) continues to see growth in critical areas of its business, such as the Pharmacy and Consumer Wellness segment, while it addresses the industry-wide challenges that impacted its Health Care Benefits segment. The company’s integrated healthcare model offers a unique value proposition in the market. By owning several components of the healthcare value chain, CVS Health Corporation (NYSE:CVS) can realize cost savings and operational efficiencies which the standalone competitors cannot match.
Ariel Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Lastly, American healthcare company, CVS Health Corporation (NYSE:CVS) underperformed in the period. The company preannounced a third-quarter preliminary profit estimate materially below consensus expectations and pulled its 2024 guidance due to continued medical cost pressures. Investor concerns around the recently proposed Pharmacy Benefit Management (PBM) legislation further weighed on shares. Despite these challenges, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage (MA). CVS believes the program can remain an attractive business for Aetna and CVS Health over time as it implements a multi-year repricing strategy across plan level benefits. Meanwhile, CVS continues to take actions to drive long-term success including the appointment of longtime company executive David Joyner as President and CEO as well as adding four new board members.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
% Decline Over Past 1 Year: ~22%
Number of Hedge Fund Holders: 80
Market Cap as on March 7: $126.4 billion
Applied Materials, Inc. (NASDAQ:AMAT) is engaged in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. Stifel analysts reiterated the “Buy” rating on the company’s stock, maintaining a price target of $235.00. There are expectations of stability in advanced foundry and logic segments. Brian Chin, an analyst of Stifel, remains optimistic about Applied Materials, Inc. (NASDAQ:AMAT)’s outlook, lauding the potential to sustain growth amidst the current challenges.
For Q2 2025, the company is encouraged by the trends aiding continuing customer investments to enable leading-edge technology inflections, while taking into consideration export control related headwinds. For Q2 2025, Applied Materials, Inc. (NASDAQ:AMAT) expects total net revenue of $7,100 million (+/- $400 million), and a non-GAAP gross margin of ~48.4%. Overall, the semiconductor equipment industry continues to experience a period of transformation fueled by the higher demand for advanced chips throughout various sectors. Applied Materials, Inc. (NASDAQ:AMAT)’s competitive advantage revolves around its broad portfolio of technologies enhancing chip efficiency and enabling advanced packaging solutions.
Vltava Fund, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials, Inc. (NASDAQ:AMAT) and Lam Research. Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Applied Materials provides manufacturing equipment, services, and software for the semiconductor, display, and related industries. Its principal business activities are semiconductor systems and Applied Global Services. Its largest customers are Samsung and Taiwan Semiconductors, but its overall clientele is more diversified than is that of Lam Research. At first glance, it would appear that Applied Materials has a somewhat less tangible and definable competitive advantage compared to KLA Corporation and Lam Research, but the numbers do not support such a view. Net margins likewise in the neighborhood of 27% and ROCE around 30% are outstanding. Basically, it can be said that all three companies we own have very similar underlying profitability metrics. Even their valuations, growth, and potential are similar. All have strong free cash flow and strong balance sheets, and they are regularly buying back their own shares over the long term and in large volumes…” (Click here to read the full text)
3. Lam Research Corporation (NASDAQ:LRCX)
% Decline Over Past 1 Year: ~15.1%
Number of Hedge Fund Holders: 84
Market Cap as on March 7: $101.4 billion
Lam Research Corporation (NASDAQ:LRCX) designs, manufactures, markets, refurbishes, and services semiconductor processing equipment utilized in the fabrication of integrated circuits. Needham analyst Charles Shi has maintained the bullish stance on the company’s stock, giving a “Buy” rating. The rating is backed by the company’s recent strategic plans. It has recently unveiled its 2028 and 2030 target models. Amidst the potential risks, the analyst remains optimistic about these targets, and believes in its capability. With respect to CY 2028 financial model, Lam Research Corporation (NASDAQ:LRCX) expects revenue in the range of $25 billion – $27 billion.
A critical highlight of the target models is the strong gross margin target of ~50%, which the analyst views positively. Additionally, there is confidence in Lam Research Corporation (NASDAQ:LRCX)’s operational expenditure planning and conservative share buyback strategies, which can aid strong growth in EPS. The company’s strong position in the NAND market offers a significant growth opportunity. With the demand for high-capacity storage solutions rising, thanks to the data-intensive applications and cloud computing, Lam Research Corporation (NASDAQ:LRCX)’s expertise in NAND technologies can result in significant revenue growth.
Vltava Fund, an investment management company, recently released its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials and Lam Research Corporation (NASDAQ:LRCX). Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Dozens of companies are directly or indirectly involved in the production of semiconductors. Within this broad group of companies, there are several without which it would not be possible to produce advanced types of semiconductors in the world today. These include a group of five very well-known companies, each of which has a dominant global position in its particular field, and which together operate more or less as oligopolies. These are Lam Research, Applied Materials, KLA Corporation, ASML, and Tokyo Electron. At the end of the year, we benefited from a significant correction in the share prices of Applied Materials and Lam Research, and, together with KLA Corporation, we now own three of them. We view these as one collective investment into a critical point within a very important segment of the global economy that is growing and will continue to grow over the long term.
Lam Research manufactures wafer fabrication equipment for the semiconductor industry and also provides related services. The company is a market leader in plasma etching, thin film deposition platforms, photoresist systems, as well as wet and plasma-based cleaning products for individual wafers. Its main customers are the four major semiconductor manufacturers Micron, Samsung, SK Hynix, and Taiwan Semiconductors. Lam Research is a business with net margins of around 27% and ROCE of about 30%. Capital outlays are relatively small. The company has good capital allocation with a preponderance of share buybacks…” (Click here to read the full text)
2. Merck & Co., Inc. (NYSE:MRK)
% Decline Over Past 1 Year: ~22%
Number of Hedge Fund Holders: 91
Market Cap as on March 7: $239.0 billion
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company. Nico Chen, an analyst from DBS, maintained a “Buy” rating on the company’s stock and the associated price target remains the same at $100.00. The rating is backed by factors highlighting the company’s healthy market position and growth potential. The analyst further added that a significant driver of this favourable outlook is Keytruda, Merck & Co., Inc. (NYSE:MRK)’s blockbuster drug, which has placed the company as a leader in oncology.
Furthermore, another critical factor is the promising development of sac-TMT, which is an antibody-drug conjugate for treating advanced non-small cell lung cancer, which has received a Breakthrough Therapy Designation from the US FDA. The analyst opines that this designation is expected to expedite its market entry and drive Merck & Co., Inc. (NYSE:MRK)’s share price. Overall, the rating stems from the company’s strong financial outlook, with an anticipated ramp up of net income growth and a comparatively low risk of patent expiries versus the industry peers.
GreensKeeper Asset Management, an investment management company, released its Q3 investor letter. Here is what the fund said:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
1. Adobe Inc. (NASDAQ:ADBE)
% Decline Over Past 1 Year: ~19.8%
Number of Hedge Fund Holders: 117
Market Cap as on March 7: $195.6 billion
Adobe Inc. (NASDAQ:ADBE) operates as a technology company. Keith Bachman, an analyst from BMO Capital, maintained a “Buy” rating on the company’s stock. The associated price target remains the same at $515.00. The rating was backed by factors including the company’s consistent performance and market leadership. As per the analyst, Adobe Inc. (NASDAQ:ADBE)’s robust position in its core product categories, such as Creative Cloud, Document Cloud, and Experience Cloud, continues to reinforce its growth potential. The integration of AI and Adobe Express can contribute positively to net new ARR and overall growth, aiding the analyst’s rating.
Elsewhere, Michael Turrin, an analyst from Wells Fargo, maintained a “Buy” rating on Adobe Inc. (NASDAQ:ADBE)’s stock. The rating stemmed from the company’s promising start to the year in both the Digital Media and Digital Experience segments. Additionally, the valuation of Adobe Inc. (NASDAQ:ADBE)’s shares appears attractive, which suggests growth potential. The analyst also believes that the company can capitalize on multiple AI-enabled product cycles, aided by its robust market position and expected product developments.
Polen Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We added to several existing positions in the quarter including Adobe Inc. (NASDAQ:ADBE), Workday, Shopify, MSCI, and Paycom Software. We feel Adobe is poised for re-accelerating revenue and earnings growth partially due to the monetization of its Firefly GenAI product embedded in its creative software.”
While we acknowledge the potential of ADBE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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