10 Best Underperforming Tech Stocks to Buy for a Turnaround

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.

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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. (NASDAQ:ZS) 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 (NYSE:FICO) 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. (NASDAQ:CHKP) 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. (NYSE:SNOW) 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. (NASDAQ:OKTA) provides workforce and customer identity solutions that help businesses and developers manage authentication, authorization, user security, and partner access.

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