In this piece, we discuss the 10 Undervalued Stocks to Invest in According to Goldman Sachs.
Goldman Sachs released its 2026 Economic and Financial Market Outlook report on January 12, 2026, in which it reported that the economy is starting the new year with strong momentum and dismissed concerns of a widespread recession.
While the investment bank acknowledged policy shocks in 2025, including a tariff spike and a downturn in immigration, that adversely impacted real wages, labor supply, and confidence, Goldman describes the slowdown as orderly rather than disruptive. Policy shocks did push unemployment upward, but not significantly, whereas consumer spending, nearly 70% of U.S. GDP, is largely in line with its long-term growth trend, thanks to rising equity and home prices.
Looking back, the bank views last year’s challenges as policy-driven and temporary, with the inflationary impact of tariffs described as a one-time price-level shift. Meanwhile, most of the pass-through has already been absorbed by the market, according to Goldman Sachs, with wage demands remaining muted. Moreover, broader inflation is projected to ease as wage growth softens and rental rates settle at their lowest level in more than a decade. The firm forecasts core PCE inflation to slow down from 2.9% at the start of the year to roughly 2.3% by the year-end. Additionally, two Federal Reserve rate cuts are projected this year, which should bring policy close to neutral, according to the bank.
Discussing growth, Goldman Sachs favors artificial intelligence (AI), expecting sustained technology investment to support demand and contribute significantly to GDP without an unsustainable level of borrowing, unlike in past economic booms that ended badly. The bank noted that corporate balance sheets remain relatively healthy, with non-financial business debt declining as a share of GDP.
Against this backdrop, Goldman Sachs assigns a 25% probability of a recession this year, below the 33% consensus. In this projected scenario, where earnings growth is expected to remain strong despite heightened index-level valuations, investors are increasingly searching for areas where pricing and fundamentals diverge.
On this note, let’s now look at the 10 Undervalued Stocks to Invest in According to Goldman Sachs.
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Our Methodology
To curate our list of the 10 undervalued stocks to invest in according to Goldman Sachs, we scanned Goldman Sachs’ 13-F filings. Next, we filtered out stocks trading at the lowest forward price-to-earnings multiple as of January 19, 2025. Finally, we ranked these stocks in ascending order by the number of hedge funds holding stakes in each. We assessed hedge fund sentiment for each stock using Insider Monkey’s hedge fund database, which tracks 978 stocks as of Q3 2025.
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. T-Mobile US, Inc. (NASDAQ:TMUS)
Forward Price-to-Earnings Multiple: 15.72x
Number of Hedge Fund Holders: 81
T-Mobile US, Inc. (NASDAQ:TMUS) is one of the 10 Goldman Sachs undervalued stocks to invest in.
On January 16, 2026, T-Mobile US, Inc. (NASDAQ:TMUS) saw Bernstein lower its price target from $265 to $245, while reiterating a ‘Market Perform’ rating. The firm’s updated stance reflects a structural shift in the competitive dynamics across the U.S. telecom sector. The firm highlighted the competition in the sector that intensified every quarter in 2025, eroding the telco gains recorded in the first half. While acknowledging margin pressure within the traditional wireless segment, the investment firm highlighted challenges in the cable operators segment as well, reflecting on the broader industry challenges. Looking ahead, Bernstein expects the increasing competition to persist and limited short-term stabilization to occur.
Meanwhile, on January 7, 2026, Scotiabank reduced its price target on T-Mobile US, Inc. (NASDAQ:TMUS) from $278.00 to $270.50, reiterating an ‘Outperform’ rating. While acknowledging the promotional activity that rose during the holiday season, the investment bank emphasized positive industry-wide revenue and EBITDA growth trends. The firm signals resilience in underlying demand despite aggressive pricing.
T-Mobile US, Inc. (NASDAQ:TMUS) focuses on providing wireless voice, messaging, and data services. It serves postpaid, prepaid, and wholesale customers with its nationwide 5G-focused network footprint.
9. AT&T Inc. (NYSE:T)
Forward Price-to-Earnings Multiple: 10.63x
Number of Hedge Fund Holders: 84
AT&T Inc. (NYSE:T) is included in our list of the 10 Goldman Sachs undervalued stocks to invest in.
On January 16, 2026, AT&T Inc.’s (NYSE:T) price target was reduced by Bernstein from $31.00 to $30.00, with ‘Outperform’ rating remaining intact. The update came as the firm views 2026 as a year of heightened competition in the sector. This stance builds on the trend of increasing competition seen in the previous year. The investment firm discussed challenges in both the cable operator and traditional wireless segments, reflecting broader industry headwinds. Looking ahead, the firm expects limited stabilization, with competition projected to remain elevated in 2026.
Meanwhile, on January 8, 2026, AT&T Inc. (NYSE:T) announced the launch of AT&T IoT Network Intelligence, an innovative solution that offers enterprises deeper visibility into the performance of 4G- and 5G-connected devices. Looking ahead, the company aims to capitalize on the platform’s device-level KPIs, location-based insights, and analytics capabilities, which position IoT as a key long-term growth catalyst, driving the company’s growth by enhancing efficiency and security for customers.
AT&T Inc. (NYSE:T) offers wireless, broadband, and wireline telecommunications services across the U.S., as well as additional wireless operations in Mexico. It serves consumers and enterprises through its Communications and Latin America segments.
8. Adobe Inc. (NASDAQ:ADBE)
Forward Price-to-Earnings Multiple: 12.58x
Number of Hedge Fund Holders: 88
Adobe Inc. (NASDAQ:ADBE) is one of the 10 Goldman Sachs undervalued stocks to invest in.
As of January 16, 2026, investor sentiment surrounding Adobe Inc. (NASDAQ:ADBE) remains cautiously constructive. Roughly 60% of analysts maintain their bullish tones with a consensus price target of $417.50, implying 37.30% upside. However, investor debate is growing around the company’s short-term catalysts and longer-term franchise strength.
One recent analyst update came from Oppenheimer on January 13, 2026, when the investment firm downgraded Adobe Inc. (NASDAQ:ADBE) from ‘Outperform’ to ‘Perform’ without assigning a price target. The firm’s neutral stance comes amid broader sector uncertainty.
On January 9, 2026, BMO Capital downgraded Adobe Inc. (NASDAQ:ADBE) to ‘Market Perform’, cutting its price target from $400.00 to $375.00, reflecting rising competition within Creative Cloud, particularly among small businesses, students, and freelancers. While the firm views Adobe as a cheaply valued stock, BMO Capital sees limited upside catalysts at the moment and expects shares to remain range-bound.
Furthermore, on January 5, 2026, Jefferies downgraded Adobe Inc. (NASDAQ:ADBE) from ‘Buy’ to ‘Hold’, reducing its price target from $500.00 to $400.00. The firm’s update came as part of a broader 2026 software reset. The firm noted relative strength in the infrastructure over the applications segment amid gradual AI monetization.
Adobe Inc. (NASDAQ:ADBE), a global software leader, provides digital media and digital experience solutions. Through its offerings, the company enables content creation, document management, and customer experience optimization for creative professionals, enterprises, and marketers worldwide.
7. Merck & Co., Inc. (NYSE:MRK)
Forward Price-to-Earnings Multiple: 11.57x
Number of Hedge Fund Holders: 92
Merck & Co., Inc. (NYSE:MRK) is included in our list of the 10 Goldman Sachs undervalued stocks to invest in.
As of January 16, 2026, analyst sentiment on Merck & Co., Inc. (NYSE:MRK) stands broadly constructive, with roughly 60% of analysts bullish. However, the $115.00 consensus price target implies a modest 3.60% upside. The broader sentiment reflects tempered short-term expectations despite long-term optimism.
Its healthier longer-term outlook was discussed in Wolfe Research’s January 8, 2026, update, when the firm upgraded Merck & Co., Inc. (NYSE:MRK) from ‘Peer Perform’ to ‘Outperform’ and raised the price target to $135.00. The firm updated its valuation model, factoring in the company’s late-stage pipeline, potential label expansions, and prescriber feedback. Citing model updates, the firm saw an attractive five-year revenue bridge and predicted the stock is set to surge, thanks to accretive M&A and a favorable catalyst trajectory.
The positive analyst stance was reinforced on the strategic front, with Reuters reporting on January 8, 2026, that Merck & Co., Inc. (NYSE:MRK) is exploring the potential acquisition of cancer drug developer Revolution Medicines. The potential $28-$32 billion deal, the largest pharma transaction in the past three years, will strengthen the company’s oncology pipeline, with Keytruda patent risks expected later in the decade.
Merck & Co., Inc. (NYSE:MRK), a global healthcare company, focuses on prescription medicines, vaccines, biologics, and animal health products. The company boasts a strong oncology franchise, alongside an expanding late-stage pipeline across multiple therapeutic areas.
6. AbbVie Inc. (NYSE:ABBV)
Forward Price-to-Earnings Multiple: 15.27x
Number of Hedge Fund Holders: 93
AbbVie Inc. (NYSE:ABBV) is one of the 10 Goldman Sachs undervalued stocks to invest in.
On January 14, 2026, Reuters reported that AbbVie Inc. (NYSE:ABBV) is looking to deepen its push into the rapidly growing obesity-treatment market, outlining its plans at the JPMorgan Healthcare Conference. The company’s plans center on GUBamy, an amylin-mimetic weight-loss drug licensed from Danish biotech Gubra. Emphasizing differentiation rather than a first-mover strategy, the company’s management highlighted that existing first-generation GLP-1 therapies pose problems related to tolerability and durability. These shortcomings drive high patient drop-off rates, management noted.
In contrast to GLP-1 drugs like Novo Nordisk’s Wegovy or Eli Lilly’s Zepbound, amylin-based therapies aim to replicate a pancreas-derived hormone that reduces appetite and slows gastric emptying. Furthermore, initial studies show that these drugs help preserve muscle mass while promoting weight loss. Thus, AbbVie Inc. (NYSE:ABBV) believes patients may be more likely to stay on treatment longer. Management appears optimistic about capitalizing on the market, projected to generate roughly $150 billion in annual sales over the next decade.
AbbVie Inc. (NYSE:ABBV) also aims to leverage the overlap between cosmetic and weight-loss patients on the back of its established aesthetics franchise. With this, the company could integrate care models for more efficient customer engagement.
AbbVie Inc. (NYSE:ABBV), a research-based biopharmaceutical company, develops therapies across immunology, oncology, neuroscience, virology, aesthetics, and metabolic diseases. The company leverages diversified pipelines and global commercialization capabilities, driving durable growth and innovation.
5. Micron Technology, Inc. (NASDAQ:MU)
Forward Price-to-Earnings Multiple: 11.45x
Number of Hedge Fund Holders: 105
Micron Technology, Inc. (NASDAQ:MU) is included in our list of the 10 Goldman Sachs undervalued stocks to invest in.
On January 15, 2026, Barclays analyst Tom O’Malley increased the firm’s price target on Micron Technology, Inc. (NASDAQ:MU) from $275.00 to $450.00, while reiterating an ‘Overweight’ rating. The update came as part of the firm’s 2026 outlook for semiconductors and chip-equipment stocks. The firm expects AI to continue driving the sector’s growth in 2026, favoring stocks that play a central role in supporting AI growth. In 2026, the investment firm sees quality as a key metric that will differentiate winners. In this backdrop, the firm expects Micron to be a key beneficiary, given its significant role in memory and storage for AI-driven workloads.
Meanwhile, Micron Technology, Inc. (NASDAQ:MU) reinforced the AI-centric thesis on January 6, 2026, by introducing the 3610 NVMe SSD, the industry’s first PCIe Gen5 G9 QLC client SSD. Delivering up to 11,000 MB/s read and 9,300 MB/s write speeds, the product offers a unique 4TB single-sided M.2 2230 design for ultra-thin, AI-capable PCs. Boasting significantly better performance-per-watt compared to prior generations, the product reflects the company’s strategy of deploying data-center-grade innovation into mainstream client devices as AI PCs scale.
Micron Technology, Inc. (NASDAQ:MU) delivers memory and storage solutions across compute, mobile, embedded, and storage markets. The company supplies DRAM and NAND technologies, serving AI infrastructure, data centers, PCs, smartphones, automotive systems, and enterprise applications segments globally.
4. Citigroup Inc. (NYSE:C)
Forward Price-to-Earnings Multiple: 11.51x
Number of Hedge Fund Holders: 107
Citigroup Inc. (NYSE:C) is one of the 10 Goldman Sachs undervalued stocks to invest in.
On January 14, 2026, Citigroup Inc. (NYSE:C) reported Q4 2025 results, delivering an earnings beat primarily driven by a sharp recovery in dealmaking and stronger corporate client activity.
On an adjusted basis, Citigroup Inc. (NYSE:C) posted earnings of $1.81 per share, beating the $1.67 consensus. Earnings were driven by the 35% year-over-year surge in investment banking fees to $1.29 billion. Meanwhile, revenue in the banking unit grew 78% to $2.20 billion. Thanks to renewed corporate confidence and a more favorable regulatory environment, the firm reported record M&A advisory revenue in 2025.
At the same time, Markets’ revenue fell 1% in the quarter to $4.54 billion. However, full-year Markets revenue recorded an 11% growth, driven by volatility-driven client activity and over 50% growth in prime balances. During the quarter, net interest income climbed 14% to offset 6% higher expenses.
On the strategic front, Citigroup Inc. (NYSE:C) remains focused on streamlining its footprint. The company approved the sale of its Russian unit at a $1.20 billion pre-tax loss, marking its exit from Banamex. Looking ahead, the regulatory progress and cost discipline are expected to close the stock’s valuation gap with peers.
Citigroup Inc. (NYSE:C), a global financial services company, offers banking, markets, wealth, and transaction services to corporations, institutions, governments, and consumers. The company’s strategic focus lies in simplification, efficiency, and sustainable returns.
3. Bank of America Corporation (NYSE:BAC)
Forward Price-to-Earnings Multiple: 12.15x
Number of Hedge Fund Holders: 111
Bank of America Corporation (NYSE:BAC) is included in our list of the 10 Goldman Sachs undervalued stocks to invest in.
On January 15, 2026, Morgan Stanley reduced its price target on Bank of America Corporation (NYSE:BAC) from $68.00 to $64.00, while reiterating an ‘Overweight’ rating. The update came after the company posted solid Q4 results, beating consensus EPS by roughly 2%. However, the firm noted the share price drop following the results announcement, as management was expected to tighten its 55%-59% medium-term expense ratio to 54%-58%. The investment firm also touched upon the accounting change, which adds roughly $1.00 billion per quarter to fees, complicates comparisons, and tempers short-term sentiment despite the earnings beat.
The company’s January 14, 2026, earnings release featured diluted EPS of $0.98 versus $0.96 expected, net income of $7.60 billion, and revenue of $28.50 billion, slightly above consensus. The quarter marked trading strength, with sales and trading revenue rising 10% to $4.50 billion, driven by benefits from volatile markets. At the same time, net interest income (NII) rose 9.7% to $15.75 billion. Looking ahead, Bank of America Corporation (NYSE:BAC)’s management expects 7% NII growth in Q1 2026, while reaffirming 5%-7% growth for the full year 2026, with loan growth and easing deposit costs driving optimism.
Bank of America Corporation (NYSE:BAC), a diversified U.S. financial institution, offers consumer banking, wealth management, investment banking, and global market services to individuals, corporations, and institutional clients.
2. JPMorgan Chase & Co. (NYSE:JPM)
Forward Price-to-Earnings Multiple: 14.66x
Number of Hedge Fund Holders: 120
JPMorgan Chase & Co. (NYSE:JPM) is one of the 10 Goldman Sachs undervalued stocks to invest in.
On January 14, 2026, Truist raised its price target on JPMorgan Chase & Co. (NYSE:JPM) from $331.00 to $334.00, while reiterating a ‘Hold’ rating. The price revision comes as the investment firm updated its model after Q4 results. Lifting its FY2026 EPS estimate by $0.50 to $21.25, the firm cited strong growth assumptions for Markets’ revenues over the next two years. The firm’s outlook is reinforced by the company’s Q4 performance, with its Markets revenue growing by 17%, driven by a 40% surge in equities trading and a 7% growth in fixed income. The growth reflected the earnings power of the company’s trading franchise in volatile conditions.
On the previous day, JPMorgan Chase & Co. (NYSE:JPM) released its Q4 2025 results, recording $5.23 per share EPS in the quarter, beating the consensus of $5.00. The results were followed by a 2.8% decline in shares, with investor caution reflecting an 8% miss in investment banking fees versus expectations, alongside concerns surrounding the proposed U.S. cap on credit card interest rates. With net interest income rising 7% to $25.10 billion during the quarter, management guided to approximately $95.00 billion of 2026 interest income, excluding markets. With this, management reinforced its confidence in the company’s diversified earnings base following a 34% share price gain in 2025.
JPMorgan Chase & Co. (NYSE:JPM), a global financial services leader, offers consumer banking, commercial and investment banking, markets, payments, and asset and wealth management through a diversified, scale-driven franchise.
1. Capital One Financial Corporation (NYSE:COF)
Forward Price-to-Earnings Multiple: 11.12x
Number of Hedge Fund Holders: 129
Capital One Financial Corporation (NYSE:COF) is included in our list of the 10 Goldman Sachs undervalued stocks to invest in.
On January 12, 2026, Capital One Financial Corporation (NYSE:COF) received the U.S. federal judge’s preliminary approval for its revised $425 million class-action settlement with depositors. Those depositors allege they were denied promised high interest rates. In addition to the cash payout, the bank agreed to increase rates on legacy 360 Savings accounts to match 360 Performance Savings. The concession is valued at roughly $540 million by plaintiffs’ lawyers. The company also agreed to maintain both products for at least two years.
The case builds upon claims that Capital One Financial Corporation (NYSE:COF) retained older accounts at 0.30%, while offering rates above 4% to new customers under the product with similar branding.
With final approval scheduled for April 20, 2026, New York’s attorney general confirmed that the state will not proceed with its own lawsuit if the settlement takes effect.
Meanwhile, on the same day, RBC Capital raised its price target on Capital One Financial Corporation (NYSE:COF) from $255.00 to $275.00, while reiterating a ‘Sector Perform’ rating. The investment firm cited stable consumer fundamentals, expected sequential loan growth, and modest improvements in core credit metrics ahead of Q4 results.
Capital One Financial Corporation (NYSE:COF), a diversified U.S. bank, offers credit cards, consumer banking, and commercial lending. The bank serves millions of customers across deposits, payments, and credit products.
While we acknowledge the potential of COF to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than COF and that has 100x upside potential, check out our report about this cheapest AI stock.
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