In this article, we look at the 10 Best Underperforming Tech Stocks to Buy for a Turnaround.
The 2026 tech trade has not punished every corner of the sector equally. AI infrastructure names have continued to attract capital, but large parts of software, fintech, cybersecurity, and tech-enabled services have spent much of the year under pressure as investors reassess growth expectations, pricing power, and the risk that generative AI could weaken legacy software moats. Reuters reported in February that software stocks had come under pressure as AI shifted from being seen mainly as a tailwind to being viewed as a potential disruptor for parts of the sector.
That reset has also created a more selective turnaround setup. The bear case is no longer just about valuation compression. Investors are asking which companies can defend their customer relationships, convert AI into revenue, and keep margins intact as enterprise software budgets become more demanding. Morningstar argued in late March that, after months of poor performance, software offered some of the biggest upside within technology, while long-term drivers such as cloud computing, AI, and semiconductor demand remained intact.
For this article, we focused on underperforming technology stocks with credible recovery potential. The result is a list of beaten-down technology stocks where expectations have already reset, but where company-specific fundamentals, recent developments, or analyst sentiment still support a credible recovery case.
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Methodology
To build our list of the 10 Best Underperforming Tech Stocks to Buy for a Turnaround, we screened technology stocks that had meaningfully lagged the broader market or traded well below their recent highs, while still having credible recovery catalysts such as improving fundamentals, analyst upside, AI-related product shifts, or resilient core demand. We then ranked the stocks in descending order of short interest as a percentage of float.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. Zscaler, Inc. (NASDAQ:ZS)
Short Percentage of Float: 7.64%
Zscaler, Inc. (NASDAQ:ZS) is one of the best underperforming tech stocks to buy for a turnaround. The stock remains deep in recovery territory, showing a 52-week high of $336.99 and a 52-week low of $114.63, while shares traded at $172.11 on May 18. MarketBeat showed a Moderate Buy consensus rating and an average price target of $261.26, implying nearly 50% upside.
The latest analyst signal was mixed but still supportive. On May 18, Rosenblatt cut its price target on Zscaler to $223 from $250, but kept a Buy rating, with the new target still implying about 29.6% upside from the stock’s then-current price. That makes the setup less of a blind bullish call and more of a valuation-reset turnaround case.
The product story is also moving in the right direction. On April 29, Zscaler introduced the next phase of its Zero Trust Browser, aimed at securing browsing and application access as enterprises face risks from malicious extensions, phishing, unmanaged devices, and accidental GenAI-related data exposure. Earlier, on April 21, Zscaler won the 2026 Google Cloud Partner of the Year Award for Security in the Application category, with the company highlighting integrations across Google workloads, Workspace DLP, Google SecOps, and Vertex AI.
Zscaler, Inc. is a global zero-trust security company whose platform helps organizations secure users, branches, applications, data, and devices.
9. Fair Isaac Corporation (NYSE:FICO)
Short Percentage of Float: 6.95%
Fair Isaac Corporation (NYSE:FICO) is one of the best underperforming tech stocks to buy for a turnaround. FICO has been hit hard by worries that its credit-scoring moat could weaken as the mortgage market opens further to competing models. On April 22, Reuters reported that Fair Isaac shares fell 12% after Fannie Mae and Freddie Mac said they would begin accepting mortgages assessed with VantageScore 4.0, a rival model backed by Equifax, Experian, and TransUnion. The pressure has been severe enough that FICO was still roughly 50% below its 52-week high in mid-May.
The turnaround case, however, received fresh support on May 18, when FICO said an independent Milliman analysis found that FICO Score 10T was more predictive than VantageScore 4.0 for first-time homebuyer mortgage risk. The study covered nearly 20 million mortgages from 2011 through 2023, and FICO said nearly 60 lenders had already signed up for its free-access program to test FICO Score 10T alongside Classic FICO.
The company also gave investors a stronger fundamental backdrop on April 28, reporting fiscal second-quarter revenue of $691.7 million, up 39% year over year. Scores revenue rose 60%, software revenue increased 7%, and FICO raised its fiscal 2026 revenue guidance to $2.45 billion from $2.35 billion.
Fair Isaac Corporation provides analytics, decision-management software, and credit-scoring products used by lenders, insurers, telecommunications firms, retailers, and other businesses. Its FICO Score remains a major U.S. consumer credit-risk benchmark.
8. Check Point Software Technologies Ltd. (NASDAQ:CHKP)
Short Percentage of Float: 5.54%
Check Point Software Technologies Ltd. (NASDAQ:CHKP) is one of the best underperforming tech stocks to buy for a turnaround. The freshest support for the turnaround case came on May 11, when the company announced a $2.0 billion expansion of its share repurchase authorization. Check Point said it had about 104.0 million ordinary shares outstanding as of March 31 and had repurchased around 230 million shares for roughly $17.4 billion since the start of its buyback program.
The buyback followed a sharp reset in the stock. On April 30, Reuters reported that Check Point shares were down 25% in 2026 as of the previous close and fell further after the company trimmed its full-year revenue outlook due to weaker firewall appliance sales. Still, the same report noted that adjusted earnings rose 13% year-over-year to $2.50 per share, above analyst estimates, while security service revenue grew 11% to $323 million. CEO Nadav Zafrir described the firewall headwind as temporary and pointed to emerging areas such as email, cloud security, AI-related threats, and government and defense demand as growth drivers.
Check Point also added an AI security catalyst on April 22, announcing plans to integrate its AI Defense Plane with Google Cloud’s Gemini Enterprise Agent Platform to help enterprises secure AI agents through discovery, governance, and runtime protection.
Check Point Software Technologies Ltd. provides AI-powered, cloud-delivered cybersecurity products through its Infinity Platform, including Harmony for workspace security, CloudGuard for cloud protection, Quantum for network security, and Infinity Core Services for security operations.
7. Snowflake Inc. (NYSE:SNOW)
Short Percentage of Float: 5.37%
Snowflake Inc. (NYSE:SNOW) is one of the best underperforming tech stocks to buy for a turnaround. The stock has been punished hard enough to fit the title cleanly: The stock had a 52-week range of $118.30 to $280.67, while its May 18 closing price of $164.24 still sat far below last year’s high. Marketbeat listed a Moderate Buy consensus rating and an average price target of $242.19, leaving room for a recovery case if the company can reaccelerate around AI workloads.
The freshest support came on May 15, when Dataiku launched Cobuild on Snowflake, pairing Snowflake Cortex AI with Dataiku’s agentic builder. The integration lets joint customers turn natural-language intent into governed AI agents and workflows inside Snowflake, with visual review, validation, and approval before deployment. That matters because Snowflake’s turnaround case depends on proving that enterprise AI increases consumption of its data platform rather than bypassing it.
Snowflake also gave investors a near-term product catalyst on April 22, when it said Snowflake Summit 26 would run from June 1 to June 4 and feature new AI platform updates, 500+ sessions, 200+ partners, and hands-on labs focused on data, AI, applications, and agent-driven use cases.
Snowflake Inc. operates the AI Data Cloud, a platform used by more than 13,300 customers to build, use, and share data, applications, and AI.
6. Okta, Inc. (NASDAQ:OKTA)
Short Percentage of Float: 5.01%
Okta, Inc. (NASDAQ:OKTA) is one of the best underperforming tech stocks to buy for a turnaround. The stock’s weakness has been tied to broader pressure in software and questions about whether AI will compress demand for traditional enterprise applications. Barron’s reported on April 16 that Okta shares were down 17% in 2026 and 75% from their February 2021 peak, but Raymond James upgraded the stock to Outperform with an $85 price target, arguing that AI agents could expand Okta’s identity-security opportunity rather than replace it.
The freshest company-specific support came on May 14, when Okta expanded Okta for AI Agents to support new agent ecosystems, any identity provider, and access governance across enterprise resources. The update included an integration with Amazon Bedrock AgentCore, support for non-Okta identity providers, and tools for agent discovery, registry, resource controls, deactivation, and telemetry. For a turnaround story, that matters because Okta is trying to position identity as the security layer for human, machine, and AI-agent access.
The analysts’ tone has also improved. MarketWatch reported on April 21 that Barclays upgraded Okta to Overweight, following Raymond James’ upgrade days earlier, citing rising demand for identity security in the agentic AI era.
Okta, Inc. provides workforce and customer identity solutions that help businesses and developers manage authentication, authorization, user security, and partner access.
5. ServiceNow, Inc. (NYSE:NOW)
Short Percentage of Float: 4.79%
ServiceNow, Inc. (NYSE:NOW) is one of the best underperforming tech stocks to buy for a turnaround. The latest support for the recovery case came on May 19, when Bank of America reinstated coverage of ServiceNow with a Buy rating and a $130 price target. Barron’s reported that BofA viewed ServiceNow as an AI beneficiary because its workflow platform is deeply embedded in enterprise systems, making it harder to displace as companies deploy AI agents. The stock rose sharply after the note, but was still down about 32% in 2026, keeping the underperformance angle intact.
Copyright: welcomia / 123RF Stock Photo
The product case also improved on May 5, when ServiceNow launched Action Fabric, opening its “system of action” to AI agents built on ServiceNow, Claude, Copilot, or customers’ own stacks through its generally available Model Context Protocol server. The idea is that AI agents should not just read enterprise data, but execute governed work through approvals, workflows, audit trails, identity controls, and role-based permissions. That fits the turnaround thesis because AI could increase the need for ServiceNow’s orchestration layer rather than make it obsolete.
There are still risks. Reuters reported on April 22 that the stock fell after delays to the Middle East deal hurt first-quarter subscription revenue growth. However, ServiceNow also raised its 2026 subscription revenue outlook, reported $3.77 billion in first-quarter revenue, and beat earnings expectations.
ServiceNow, Inc. provides an AI-enabled enterprise platform for workflows across IT, security, risk, HR, finance, legal, procurement, customer service, and related business functions.
4. Adobe Inc. (NASDAQ:ADBE)
Short Percentage of Float: 4.31%
Adobe Inc. (NASDAQ:ADBE) is one of the best underperforming tech stocks to buy for a turnaround. Adobe fits the setup because the stock has been caught in the broader software selloff tied to AI disruption fears. Reuters reported on April 20 that Adobe shares were down about 30% in 2026 as investors weighed whether autonomous AI tools from companies such as Anthropic and OpenAI could pressure traditional software and design products.
The freshest product support came on May 6, when Adobe unveiled its new productivity agent, bringing Acrobat document intelligence into an agentic interface that can help users work with PDFs, surface insights, and create presentations, podcasts, blogs, and social posts from documents. Adobe said the tool is part of a broader agentic strategy across documents, data, and systems, which helps frame AI as a product expansion opportunity rather than just a competitive threat.
Adobe also moved to strengthen its enterprise AI case on April 28 by completing its acquisition of Semrush, adding brand visibility capabilities as AI interfaces and agents become more important in how customers discover and evaluate brands. That followed Reuters’ April 21 report that Adobe authorized a $25 billion buyback through April 2030, a signal of management confidence as the company works to reassure investors on its AI strategy.
Adobe Inc. provides creative, document, productivity, customer-experience, and AI software through products and platforms, including Creative Cloud, Acrobat, Adobe Express, Firefly, and Adobe Experience Cloud.
3. Q2 Holdings, Inc. (NYSE:QTWO)
Short Percentage of Float: 3.87%
Q2 Holdings, Inc. (NYSE:QTWO) is one of the best underperforming tech stocks to buy for a turnaround. The digital banking software company fits the setup after a sharp reset: QTWO closed at $46.88 on May 18, compared with a 52-week high of $96.68, while analysts still carried a Buy rating and an average price target of $74.31. That leaves the stock priced for skepticism, but not without recovery fuel.
The latest fundamental support came on April 29, when Q2 reported first-quarter revenue of $216.5 million, up 14% year-over-year, and adjusted EBITDA of $60.0 million, up from $40.7 million a year earlier. The company also said it signed nine Enterprise and Tier 1 contracts in the quarter, posted record first-quarter bookings, and lifted its 2026 guidance to revenue of $875 million to $882 million and adjusted EBITDA of $237 million to $242 million.
Q2 has also been pushing the AI angle into practical banking use cases. On April 28, it launched Q2 Treasury Fulfillment to automate treasury-service onboarding for commercial clients, and on April 27, it added AI-enabled account takeover protection tools for real-time fraud detection and response. Earlier, on April 16, Q2 announced Q2 Code, a governed AI development environment built with Anthropic’s Claude Code and Amazon Bedrock to help financial institutions build platform extensions faster.
Q2 Holdings, Inc. provides digital transformation solutions for banks, credit unions, alternative finance companies, and fintechs, including digital banking, fraud prevention, and data-driven engagement tools for consumer, small-business, and commercial clients.
2. Intuit Inc. (NASDAQ:INTU)
Short Percentage of Float: 3.74%
Intuit Inc. (NASDAQ:INTU) is one of the best underperforming tech stocks to buy for a turnaround. The stock fits the setup after a steep reset: As of May 18, Intuit closed at $403.16, still about 50% below its 52-week high of $813.70 from July 30, 2025. That weakness leaves the company in the penalty box even as Wall Street remains broadly constructive, with MarketBeat showing a Moderate Buy rating and an average price target of $634.26.
The most recent support for the turnaround case came on May 13, when Intuit announced new AI-driven enhancements to the Intuit Enterprise Suite, including multi-entity close automation, dimensional reporting, construction-specific tools, and integrated human capital management capabilities. The company positioned the suite as an AI-native ERP command center for mid-market businesses, with a new conversational chat interface meant to automate recurring finance tasks through virtual AI agents.
That followed Intuit’s May 6 launch of QuickBooks Workforce, which expands the company’s reach beyond accounting and tax into payroll, hiring, time tracking, benefits, and broader workforce management for small and mid-market businesses. For a beaten-down software name, the turnaround case is that AI strengthens Intuit’s financial workflow platform rather than replacing it.
Intuit Inc. is a global financial technology platform behind TurboTax, Credit Karma, QuickBooks, Mailchimp, and Intuit Enterprise Suite, serving about 100 million customers worldwide.
1. Fidelity National Information Services, Inc. (NYSE:FIS)
Short Percentage of Float: 3.32%
Fidelity National Information Services, Inc. (NYSE:FIS) is one of the best underperforming tech stocks to buy for a turnaround. The stock clearly fits the reset theme. FIS was trading at $43.37 on May 18, near the low end of its 52-week range of $41.33 to $82.74, while analysts still held a Moderate Buy rating and an average price target of $61.57, per Marketbeat.
The freshest support came on May 12, when FIS said its Supply Chain Finance Platform had been selected by Glencore to support a $2.55 billion oil-and-gas trade receivables securitization. FIS said the platform provides technology infrastructure, reporting, and operational support for the multi-jurisdiction transaction, including real-time monitoring and receivables reporting.
That followed another large-client win on May 10, when Commonwealth Bank of Australia selected FIS Data Integrity Manager to automate reconciliations across the bank. FIS said the SaaS platform, delivered through Microsoft Azure, will process more than 150 million transactions daily on a single system.
The company also gave investors a stronger earnings base on May 8, reporting first-quarter revenue of $3.3 billion, up 30% year-over-year, and adjusted EPS of $1.36, up 12%. FIS reiterated its full-year outlook, including adjusted revenue growth of 30% to 31% and free cash flow growth of 27% to 33%.
Fidelity National Information Services, Inc. provides financial technology solutions to financial institutions and businesses, helping clients run payments, banking, investing, risk, compliance, and related money-movement operations.
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