On January 22, Andrew Slimmon, Head of Applied Equity Advisors Team at Morgan Stanley Investment Management, shared his 2026 stock market outlook. Slimmon expects further room for a bullish run during the coming year, backed by additional rate cuts and a favorable AI-led sentiment. Despite looming fears of correction, he sees potential opportunities to emerge following expected volatility linked with the midterm elections in the United States. Besides that, supportive consumer sentiment and the likely effects of the Fed’s 2025 rate cuts will keep optimism going.
The technology sector will continue to be a driving force behind the expected bullish course within the markets. Emerging technological trends, especially the ones closely tied to AI, will remain a center of attention for investors. For businesses, AI adoption will be a key discussion point as they continue to allocate resources to advance processes.
In that regard, on February 2, Forrester shared its forecasts for U.S. technology spending, which will exhibit record 8.3% growth in 2026. This will translate into an annual spend of around $2.9 trillion across different technology verticals.
The forecasts mentioned above reflect a highly favorable outlook for technology stocks, especially those that remained under pressure throughout 2025.
With that background, let’s explore our 10 Beaten-Down Technology Stocks That Could Bounce Back in 2026.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed technology companies with market capitalizations above $2 billion that have declined by over 30% over the last 12 months. We then narrowed our search to stocks with at least 60% upside potential according to TipRanks consensus as of the February 26 closing. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Freshworks Incorporated (NASDAQ:FRSH)
Freshworks Incorporated (NASDAQ:FRSH) is one of the 10 beaten-down technology stocks that could bounce back in 2026.
On February 11, Canaccord Genuity reduced the firm’s price target on Freshworks Incorporated (NASDAQ:FRSH) from $19 to $14. The firm maintained its Buy rating on the shares, offering almost 76% upside potential despite the target revision.
Canaccord Genuity noted that the company delivered fourth-quarter results above expectations for both revenue and earnings, while its calendar 2026 revenue outlook came in slightly ahead of consensus. However, the firm highlighted that the recent slowdown in growth remains a concern, adding that the trends appear increasingly misaligned with management’s optimistic tone, which has led to uncertainty among investors.
On February 11, Piper Sandler analyst Billy Fitzsimmons cut the price target of Freshworks Incorporated (NASDAQ:FRSH) to $10 from $12. The analyst maintained his Neutral rating on the stock following its quarterly earnings report. Despite the revision, the stock still yields an upside potential of almost 51% at the current level.
Fitzsimmons states that FY26 projections presented a mixed outlook. Revenue and billings projections are expected to surpass consensus estimates, while operating margin and EPS guidance came in below expectations.
Freshworks Incorporated (NASDAQ:FRSH) is a software developer that offers cloud-based SaaS solutions worldwide. With a focus on user-friendly AI-enabled solutions for customers, they deliver IT service management, customer experience, and sales & marketing. They cater to diverse organizational clients ranging from early-stage companies to large enterprises.
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