Two Undervalued Artificial Intelligence Stocks Set for Potential Rebound in 2026

The broader artificial intelligence stocks sector has captured investor enthusiasm in 2025, with the S&P 500 climbing 18% year-to-date. However, not all AI stocks have participated equally in this rally. Upstart Holdings and Atlassian have significantly trailed the broader market, declining 22% and 34% respectively, creating what some analysts view as genuine value opportunities.

Upstart Holdings: AI-Powered Lending Platform with Strong Growth Trajectory

Upstart represents a compelling case study in artificial intelligence stocks that may have been undervalued by the market. The company operates an AI-driven lending platform that fundamentally transforms how banks and credit unions assess credit risk. Unlike traditional lenders relying on FICO Scores and rule-based systems, Upstart’s machine learning algorithms analyze more than 2,500 variables, continuously refining their predictive accuracy as borrowers make or miss payments.

The company’s technology stack includes AI models for customer acquisition, fraud detection, and default forecasting, with many lending processes now fully automated through its platform. This operational efficiency translates into tangible benefits: lending partners can approve a broader range of borrowers while maintaining competitive interest rates.

Recent financial performance underscores Upstart’s operational momentum. Third-quarter revenue surged 71% to $277 million, while non-GAAP net income reached $0.52 per diluted share, a dramatic swing from a $0.06 per diluted share loss in the prior year. New product categories—auto loans, home loans, and small-dollar lending—now represent approximately 12% of originations, climbing from roughly 10% in the previous quarter.

Wall Street’s consensus suggests this growth story has further runway. Analysts project 51% annual earnings growth through 2026, which places the current valuation of approximately 33 times earnings in a favorable light. Peter Christiansen at Citigroup projects the highest target price at $80 per share, implying substantial upside, while the median analyst target price of $56 implies more conservative but still meaningful appreciation potential.

Atlassian: Enterprise Software Giant Scaling Artificial Intelligence Adoption

Atlassian operates in a different market segment but presents a parallel narrative about artificial intelligence stocks gaining competitive advantages. The company dominates work management and service management software, with Jira serving as the industry standard for software development teams globally.

What distinguishes Atlassian’s competitive position is its cross-functional penetration. Gartner recently recognized Atlassian as a leader in work management software for both technical teams (development and operations) and non-technical departments (marketing, finance, human resources). This dual recognition matters strategically—it enables Atlassian to acquire customers through either technical or non-technical entry points, then expand horizontally across organizational boundaries.

The company has fortified this advantage through AI innovation. Rovo Dev assists developers in code planning, generation, and review, while the standard Rovo interface helps non-technical users surface insights and automate workflows within Jira and related products. Morgan Stanley analysts highlight Atlassian as uniquely well-positioned to capture value from the expanding AI agent opportunity.

Atlassian’s first-quarter FY2025 results demonstrate solid execution. Revenue climbed 21% to $1.4 billion and non-GAAP earnings increased 35% to $1.04 per diluted share. CEO Michael Cannon-Brookes noted that the percentage of clients utilizing AI features jumped 50% sequentially, underscoring rapid adoption rates among existing customers.

Valuation remains attractive relative to growth prospects. Wall Street models suggest 22% annual adjusted earnings growth through fiscal year ending June 2027. At approximately 41 times earnings, this premium reflects the company’s demonstrated ability to beat consensus estimates by an average of 16% over the past six quarters. Keith Weiss at Morgan Stanley positions the stock with a $320 target price, implying 100% upside from prevailing levels, while the median Wall Street target of $230 per share suggests more than 40% appreciation potential.

What These Valuations Mean for Investors

The artificial intelligence stocks highlighted above share a common characteristic: meaningful gaps between analyst consensus expectations and current market pricing. For Upstart, this gap represents an acknowledgment that AI-driven credit assessment may fundamentally reshape lending economics. For Atlassian, it reflects market skepticism about artificial intelligence adoption rates and monetization potential within enterprise software.

Both companies exhibit the financial metrics—strong revenue growth, expanding profitability, and improving product traction—that typically precede significant valuation reappraisals. Patient investors who identify undervalued opportunities during periods of sector consolidation often capture outsized returns when sentiment shifts.

Investors considering exposure to artificial intelligence stocks should weigh these opportunities against their individual risk tolerance and investment horizon.