In this piece, we discuss the 11 Most Undervalued AI Stocks to Buy Now.

As of February 25, 2026, U.S. software stocks have declined 20% over the past month, according to Reuters. The fears surrounding AI continue to weigh on investor sentiment across the broader technology sector, particularly the software group.

Earlier, Citrini Research’s February 23 report titled “The 2028 Global Intelligence Crisis” shed light on what to expect from the AI boom. The report discussed the possibility of a downturn, including skyrocketing unemployment, if AI actually replaces white-collar jobs.

However, Jim Cramer thinks otherwise. At the start of this week, the expert argued that the report presents a worst-case scenario and that he personally believes investors are buying the speculative, hypothetical narrative.

He commented, “I can’t help but grow more pessimistic when I see how easily a piece of science fiction can crush the market as if it’s science fact.”

Meanwhile, Matt Shumer, CEO and co-founder of AI firm Otherside AI, also presented a report on February 9 with a similar theme.

Reuters reports that the sector-wide selloff has tempered the valuation of technology stocks, with the sector’s valuation relative to the broader sector at its worst level in six years. The sector’s forward price-to-earnings multiple now sits at the same level as defensive consumer staples, as evidenced by Walmart’s valuation, which is now higher than major tech giants like Apple, Alphabet, Amazon, Microsoft, and Nvidia.

Amid a fear-based valuation reset, a case builds around the most undervalued AI stocks, which we will now discuss.

Methodology

To curate our list of the 11 most undervalued AI stocks to buy now, we used an online screener to identify AI stocks trading below a forward price-to-earnings multiple of 17x. We defined AI stocks as companies considered either pure-play AI firms or beneficiaries of AI technology. Next, we assessed analyst and hedge fund sentiment surrounding these stocks. To find hedge fund sentiment, we used Insider Monkey’s hedge fund database, which tracks over 1,000 hedge funds as of Q4 2025.

Moreover, we narrowed down our list to only those stocks that have recently reported significant developments likely to impact investor sentiment. Finally, we ranked our list of the most undervalued AI stocks to buy now in ascending order based on the number of hedge funds bullish on each stock.

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).

Note: All data were extracted as of market close on February 25, 2026.

11. Leidos Holdings, Inc. (NYSE:LDOS)

With significant analyst and hedge fund sentiment, alongside a low forward price-to-earnings (PE) ratio, Leidos Holdings, Inc. (NYSE:LDOS) secures a spot on our list of the most undervalued AI stocks to buy now.

On February 19, 2026, Leidos Holdings, Inc. (NYSE:LDOS) demonstrated its strong operational progress, announcing that its Terminal Flight Data Manager system had started running at Reagan National Airport. Marking a 45% faster rollout than the typical 18-month cycle, the system takes the place of paper flight strips, featuring real-time digital tracking and predictive tools.

The move reflects the company’s focus on mission-critical programs, with the system primarily serving the Federal Aviation Administration. The system is currently live in ten airports, with more planned for the future. Looking ahead, Leidos Holdings, Inc. (NYSE:LDOS) remains well-positioned to capitalize on government plans to modernize U.S. airspace infrastructure.

Amid this positive development, analysts at Stifel remain skeptical about Veterans Affairs contract risks and concerns surrounding AI’s impact on the stock, prompting a price target cut from $220 to $205. While noting the company’s strong fourth-quarter EBITDA, the firm sees limited short-term visibility and describes management’s FY26 guidance as conservative. As of February 18, 2026, the firm keeps a ‘Hold’ rating on Leidos Holdings, Inc. (NYSE:LDOS).

Leidos Holdings, Inc. (NYSE:LDOS) focuses on delivering defense, civil, and health technology solutions. The company specializes in providing digital modernization, mission systems, infrastructure security, and federal health services, primarily serving U.S. government agencies.

10. ICON Public Limited Company (NASDAQ:ICLR)

With significant analyst and hedge fund sentiment, alongside a low forward price-to-earnings (PE) ratio, ICON Public Limited Company (NASDAQ:ICLR) secures a spot on our list of the most undervalued AI stocks to buy now.

Amid an internal accounting investigation, the stock has slid nearly 50% and 45% on a one-year and year-to-date basis, respectively. Analysts at Jefferies revisited the stock on February 23, 2026, and noted that the stock had fallen enough, making its current valuation attractive. Although the firm reduced the target on the stock from $175 to $135, it remains positive on the company’s outlook despite the concerns surrounding AI’s impact on the R&D industry. While acknowledging the potential pressure that AI will put on labor-intensive companies, such as ICON Public Limited Company (NASDAQ:ICLR), the firm says AI will not disrupt the industry to the extent the market is predicting. Jefferies upgraded the stock from ‘Hold’ to ‘Buy’.

Meanwhile, while discussing the share price decline tied to the company’s investigation into accounting practices, analysts at TD Cowen calmed investors down by noting that the investigation’s impact on the company’s revenue is exaggerated. Cutting 2026 and beyond revenue estimates by just 2%, the firm projects a 14% impact on ICON Public Limited Company (NASDAQ:ICLR)’s adjusted earnings per share in 2026 and 2027.

ICON Public Limited Company (NASDAQ:ICLR) is a clinical research company that provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries.