Growth stocks suffered an unusual shakeout in 2025. While AI-related names soared to unprecedented valuations, quality growth companies facing temporary challenges or misunderstood narratives saw their stocks collapse despite maintaining solid fundamentals. This divergence created opportunities for investors willing to look beyond headlines and examine actual business performance.
The most compelling opportunities emerge when growth companies trade at value multiples. These dislocations occur when markets overreact to near-term concerns, temporary setbacks, or disruption fears that prove exaggerated. Patient investors who buy quality businesses at depressed valuations can generate outsized returns as fundamentals reassert themselves and valuations normalize.
Three growth stocks currently fit this profile—each down substantially from recent highs despite continuing to grow revenue at double-digit rates. The market has priced in severe business deterioration that financial results don’t support, creating potential for significant re-rating as concerns fade or prove overblown.
The Trade Desk Inc. (TTD)
Market Cap: $18 billion | Currently trading around $37 | Forward P/E: 18.5x
The Trade Desk ranks among 2025’s worst-performing S&P 500 stocks, falling over 70% from its all-time high. The advertising technology company faced a perfect storm: a botched product launch that drove customers away, intensifying competition from Amazon’s advertising business, and general market skepticism about digital advertising growth.
The company’s Kokai AI-powered ad-buying platform launched to mixed reviews, causing some customers to abandon The Trade Desk entirely while others scaled back usage. This self-inflicted wound disrupted what had been consistent market share gains and strong customer retention. Management is working to address Kokai’s shortcomings, but the damage to investor confidence was severe.
Amazon’s entry into the advertising market created additional pressure. Amazon possesses shopping data that’s unmatched in accuracy—actual purchase behavior rather than inferred intent. This data advantage allows Amazon to offer advertisers superior targeting capabilities, capturing market share that The Trade Desk expected to win.
These challenges are real and have impacted growth rates. But the market’s reaction appears disproportionate to the actual business deterioration. Third-quarter revenue still grew 18% year-over-year, and Wall Street expects 16% growth in 2026. These aren’t the growth rates of a disrupted business—they’re the performance of a market leader navigating temporary headwinds.
The Trade Desk now trades at 18.5 times forward earnings, below the S&P 500’s 22.1x multiple. This represents a remarkable valuation discount for a company growing revenue in the mid-teens while the average S&P 500 company grows in low single digits. The disconnect between growth and valuation suggests the market is pricing in permanent business impairment that may not materialize.
The Trade Desk’s core value proposition remains intact. The company operates an independent demand-side platform that allows advertisers to buy digital ads across multiple publishers without conflicts of interest. This independence differentiates The Trade Desk from publisher-owned ad platforms like Google and Amazon that face inherent conflicts between maximizing advertiser ROI and their own revenue.
Programmatic advertising continues gaining share of total advertising spending as marketers demand better measurement and optimization. The Trade Desk’s platform provides transparency and control that traditional advertising channels cannot match, driving secular growth independent of overall advertising market health.
The Kokai issues, while disappointing, appear fixable through software updates and customer support improvements. The Trade Desk’s engineering talent and product development capabilities should allow the company to address customer concerns and restore platform performance. Once confidence rebuilds, customer acquisition and retention should improve.
Amazon’s advertising business poses ongoing competitive pressure but hasn’t prevented The Trade Desk from growing. The two platforms serve somewhat different use cases—Amazon excels at lower-funnel shopping ads while The Trade Desk focuses on broader brand advertising and cross-platform campaigns. This differentiation allows both companies to coexist profitably.
For investors willing to bet that The Trade Desk’s challenges prove temporary rather than permanent, current valuations offer compelling risk-reward. If the company can stabilize growth in the mid-teens while trading at below-market multiples, significant re-rating potential exists as concerns fade.
Adobe Inc. (ADBE)
Market Cap: ~$155 billion | Currently trading around $334 | Forward P/E: 14.4x
Adobe faces relentless skepticism about generative AI disruption. The prevailing narrative suggests that AI image generators will eliminate demand for professional creative software, rendering Adobe’s flagship products obsolete. This concern drove significant selling pressure despite financial results that contradict the disruption thesis.
Quarterly revenue growth has remained remarkably consistent even as generative AI capabilities improved dramatically. Adobe grew revenue in the high single to low double digits throughout 2023, 2024, and 2025—the exact period when AI disruption supposedly intensified. If AI image generators were actually replacing Adobe’s products, revenue growth would be decelerating noticeably. Instead, growth rates have held steady.
Adobe’s response to AI disruption has been integration rather than resistance. The company embedded generative AI capabilities directly into its Creative Cloud applications, allowing professional designers to leverage AI as a tool rather than viewing it as a replacement. This approach recognizes that professional creative work requires precise control, brand consistency, and iterative refinement that fully automated AI generation cannot provide.
Professional designers aren’t seeking tools that generate finished work automatically—they want tools that accelerate workflows while maintaining creative control. Adobe’s Firefly generative AI assists with specific tasks like background removal, object extension, or generating initial concepts, but designers retain ultimate control over final output. This human-AI collaboration model proves more valuable for professional use cases than standalone AI generators.
The market’s skepticism has compressed Adobe’s valuation to just 14.4 times forward earnings—a remarkable discount for a company with Adobe’s market position, margins, and growth profile. Software companies growing revenue at double-digit rates typically command premium valuations, not discounts to the broader market.
Adobe’s business model provides unusual stability through subscription-based Creative Cloud revenue. Once creative professionals and enterprises adopt Adobe’s tools, switching costs are substantial due to workflow integration, file format dependencies, and skill investments. This installed base generates predictable recurring revenue that should persist regardless of AI competitive threats.
The Document Cloud segment, which includes PDF and e-signature capabilities, provides diversification beyond creative tools. Enterprise document workflows have proven resilient to disruption, and Adobe’s dominant position in PDF standards creates barriers that protect this revenue stream.
Adobe’s financial performance demonstrates pricing power that contradicts disruption concerns. The company has successfully implemented price increases across Creative Cloud subscriptions without significant customer losses, indicating that perceived value remains high despite generative AI availability.
Management’s confidence in the business is evident through continued investment in R&D and product development. If Adobe truly faced existential threats from AI disruption, the company would be retrenching and cutting costs. Instead, Adobe continues investing in innovation, suggesting management sees growth opportunities rather than defensive positioning.
For investors believing professional creative work will continue requiring sophisticated tools with human control, Adobe offers a high-quality business at value prices. The 14.4x forward earnings multiple prices in substantial disruption risk that financial results don’t support.
PayPal Holdings Inc. (PYPL)
Market Cap: ~$62 billion | Currently trading around $58 | Forward P/E: 10x
PayPal trades at just 10 times forward earnings—the cheapest valuation among these three stocks and remarkably low for a digital payments processor with global scale. The company faces competitive pressure from multiple directions: Apple Pay and Google Pay in mobile payments, Block’s Cash App in peer-to-peer transfers, and Stripe in e-commerce checkout.
This competitive intensity has moderated PayPal’s growth to mid-to-high single digits rather than the double-digit rates the company delivered historically. Revenue growth of 6-8% doesn’t excite growth investors accustomed to tech companies posting 20%+ expansion. But this measured growth combined with extreme valuation compression creates interesting dynamics.
PayPal is aggressively buying back shares at depressed prices, creating meaningful earnings per share accretion even with modest revenue growth. When a stock trades at 10x earnings, every dollar spent on buybacks has outsized impact on per-share metrics. PayPal’s substantial free cash flow generation funds significant repurchases that are reducing share count at a rapid pace.
This share count reduction causes earnings per share to grow much faster than revenue. Even with 7% revenue growth, EPS can grow 12-15% when combined with aggressive buybacks. This EPS growth at a 10x earnings multiple creates a compelling value proposition—investors are essentially buying double-digit EPS growth at a single-digit earnings multiple.
The market’s pessimism reflects concerns about competitive positioning and whether PayPal can defend its market share in digital payments. These concerns have merit—the payments landscape has become intensely competitive, and PayPal no longer enjoys the dominance it once held in online checkout.
But the market may be underestimating PayPal’s defensive moats. The company processes over $1.5 trillion in annual payment volume across 400+ million active accounts. This network scale provides advantages in fraud prevention, regulatory compliance, and merchant relationships that new entrants struggle to replicate.
PayPal’s Venmo business continues growing faster than the legacy platform, demonstrating the company can compete effectively in modern payment experiences. Venmo’s integration with debit cards and merchant acceptance is expanding the platform beyond pure peer-to-peer transfers into broader payment use cases.
The company’s international presence provides growth opportunities as digital payments adoption accelerates in emerging markets. While competition exists globally, PayPal’s brand recognition and existing infrastructure position it to capture share in expanding markets.
Management’s willingness to buy back stock aggressively at current prices signals confidence that the business won’t deteriorate materially. If executives believed competitive threats would severely damage PayPal’s position, they would preserve cash rather than deploying it into buybacks. The aggressive repurchases suggest management views current valuations as significantly undervaluing the business.
The asymmetric opportunity comes from valuation compression creating downside protection. At 10x forward earnings with modest but positive growth, how much lower can PayPal realistically trade? Meanwhile, any evidence that competitive threats are stabilizing or the company is defending share better than expected could drive significant multiple expansion back toward historical averages.
For value investors seeking growth exposure at bargain prices, PayPal offers the most extreme valuation dislocation. The 10x forward earnings multiple prices the company as a slow-growth mature business, but 7% revenue growth and double-digit EPS growth from buybacks suggest a healthier business than the valuation implies.
The Value-Growth Opportunity
These three stocks demonstrate how market sentiment can create pricing inefficiencies when temporary challenges or misunderstood narratives drive selling pressure. The Trade Desk faces fixable product issues and intensifying competition but continues growing mid-teens. Adobe confronts AI disruption fears that financial results don’t validate. PayPal navigates competitive markets while trading at valuations reserved for declining businesses.
The common thread is quality businesses with sustainable competitive advantages trading at valuations that imply severe business deterioration. The Trade Desk maintains independent ad platform advantages. Adobe controls professional creative workflows. PayPal operates global payments scale that competitors cannot easily replicate.
Buying growth at value prices requires patience and willingness to look past near-term concerns. These stocks won’t rebound immediately—sentiment shifts take time, and the challenges facing each company are real. But for investors with multi-year time horizons, current valuations provide attractive entry points into quality businesses trading well below historical averages.
The potential for re-rating drives asymmetric returns. If The Trade Desk stabilizes growth and valuations return to market multiples, the stock could double from current levels. If Adobe continues growing while AI disruption fears fade, multiple expansion from 14x to 20x+ would drive significant gains. If PayPal’s buybacks continue while growth stabilizes, the combination of EPS accretion and multiple expansion creates compelling mathematics.
Risk remains that current challenges prove more severe than bulls anticipate. The Trade Desk could lose additional share to Amazon. Adobe might face accelerating AI disruption. PayPal’s competitive position could deteriorate faster than buybacks can offset. These scenarios would validate current valuations or drive additional downside.
But the risk-reward appears favorable given how much pessimism current prices reflect. For investors seeking growth exposure without paying growth multiples, these three stocks offer unusual combinations of solid fundamentals and compressed valuations.
