2 Unloved Stocks of 2026 to Consider Buying Now

Broadcom's fiscal Q3 2026 revenue rose 86% year over year to $29.6 billion, and management forecast about $34.8 billion for Q4; adjusted EPS nearly doubled and free cash flow increased 95% to $13.7 billion. Adobe's fiscal Q3 revenue grew 13% to a record $6.76 billion, while adjusted EPS rose 15% to $6.13; it raised its fiscal 2026 adjusted EPS target for the second consecutive quarter to $24.45–$24.50. The article argues both stocks are inexpensive versus the S&P 500's roughly 19x forward earnings multiple, while noting Broadcom's customer concentration and Adobe's moderating growth as risks.

Analysis

The key mispricing question is not whether growth is positive, but whether today’s earnings bases are durable. AVGO’s customer concentration makes reported growth unusually sensitive to a small number of spending decisions; rapid expansion can therefore raise near-term estimates while increasing the probability of a sharp forecast reset. Its custom-silicon opportunity may also benefit from customers seeking alternatives to Nvidia GPUs, but that substitution can be lumpy and does not eliminate execution or customer bargaining risk. Adobe’s risk is slower and more structural: generative AI could lower the value of creative workflows or shift pricing power toward platforms such as Canva, even while current results remain resilient. Conversely, AI features that improve retention or support paid upgrades could stabilize monetization.

The valuation comparison is not clean: AVGO is measured against FY27 consensus, Adobe against FY26 adjusted EPS, and the S&P against forward estimates. Adobe’s adjusted multiple should be checked against GAAP earnings and stock-based compensation; neither headline discount alone establishes a floor.

Days: a continued rebound is possible, but positioning and expectations can overwhelm fundamentals. Over 1–3 months, watch AVGO customer demand/backlog commentary and Adobe’s next-quarter guidance, paid AI adoption, and net new recurring revenue. Over 6–18 months, AVGO’s concentrated customer exposure and Adobe’s ability to monetize AI—not user counts—will determine whether the valuation discounts are justified. The contrarian case is strongest for Adobe if AI fears are already reflected in expectations; AVGO’s apparent cheapness is less convincing if growth is concentrated and estimates prove fragile.

Key Decisions for Investors

• If adding exposure, build a small, staged long in ADBE rather than buying the apparent valuation discount all at once. Reassess after the next report: evidence of paid AI adoption, stable recurring-revenue growth, and maintained guidance supports adding; weaker retention, monetization, or guidance falsifies the thesis.
• Treat AVGO as a higher-volatility, smaller-sized long—not a valuation-driven core position. Add only if management commentary and subsequent results support continued demand across major customers; a spending pause or material guidance cut would invalidate the setup. Avoid assuming customer concentration is already fully priced in.
• Prefer ADBE over AVGO on a relative basis only if the next results confirm Adobe’s recurring-revenue durability and Broadcom’s growth remains unusually dependent on a few buyers. This is a watchlist pair, not a blind short: both stocks could rise if estimates hold.
• Before acting on the stated multiples, verify AVGO FY27 consensus, Adobe GAAP-to-adjusted earnings reconciliation and stock-based compensation, and company disclosures on customer concentration, backlog, paid AI uptake, and recurring-revenue trends. If those measures deteriorate, there may be no trade despite low headline P/E ratios.