By Jacob Sonenshine
The stocks that are down partly because of concerns that they will fail to compete with artificial intelligence may be presenting opportunities. Jefferies analysts found a bunch.
The S&P 500 is down a little more than 3% from its record high hit in late January. The damage beneath the surface is worse. The reason the index isn't down all that much is because some sectors are up in that time. The index's energy sector, for instance, has jumped on the back of the Iran conflict. Oil prices have spiked, putting pressure on many sectors, given that it could stoke inflation and slow down consumer spending. That's why consumer discretionary is down 7%, with several other sectors down, too.
Technology is down 7% in this span. Software stocks have been beaten down because Anthropic and OpenAI are growing rapidly and gathering users in the business community, putting many business models in the industry at risk. Chip stocks are down because the market struggles to see how how demand for data-center chips used in the AI build-out could exceed current expectations. Demand could fall if customers slow the pace of their investments.
But in the wreckage lies opportunity. Often, in the early stages of a sell-off, some names that don't deserve to drop so harshly take major hits as market participants sell indiscriminately.
Right now, "perceived AI disintermediation has provided the most pronounced share [price] dislocations," writes a team of Jefferies analysts. "Some stocks have been unjustly accused in the court of investor opinion."
One of the best examples is Meta Platforms. It's down a tick since the S&P 500 dropped, but it is down 18% from its record high hit in the second half of 2025.
Jefferies analyst Brent Thill argues that the company's AI investments have been driving higher user engagement and monetization (think Instagram and Facebook). To Thill's point, Meta grew sales 22% in 2025 to $201 billion, which is staggering for a company of its size that had seen growth slow so badly in 2022 that revenue fell that year. Right now, Meta is using its AI capabilities to show the right content and advertisements to each user. That's keeping them engaged -- even in the midst of ChatGPT's attention grab -- and increasing the potential return on ad spend for brands, a dynamic that also lifts ad prices.
Thill acknowledges recent profit margin issues in light of its soaring capital expenditures and the resulting increase in expected depreciation expense. But "we see increasing validation of AI return on investment as Meta continues to stack improvements in its core recommendation and conversion engines," he writes.
The idea is that, after a brief period of continued growth in capex, margins will stabilize and then rebound as sales continue to grow over time. All told, analysts expect the company to grow earnings per share by 19% annually through 2030, according to FactSet.
That makes the stock look cheap. It trades at just over 21 times expected EPS for the coming 12 months, way down from its peak, but also about 1.1 times expected earnings growth. The S&P 500's multiple is about 1.5 times its expected earnings growth. That means investors pay fewer multiple points for every percentage point of profit growth they earn from Meta -- even though Meta is growing faster than the index.
Elsewhere, Barron's reviewed stocks from Jefferies' list that are down at least 20% from peaks and that the analysts say will remain resilient against competitive threats in AI. They include ServiceNow, Snowflake, Palo Alto Networks, Okta, Spotify and DoorDash.
Take a look at these names.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 06, 2026 12:16 ET (17:16 GMT)
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