Over 25% of S&P 500 stocks down 40% or more from highs

More than 25% of the stocks in the S&P 500 index are trading at least 40% below their peak levels as of October 8, 2026, even as the broader index sits near all-time highs. This divergence creates a specific set of opportunities for investors seeking value in beaten-down technology names.

Netflix shares have declined due to slowing growth, yet the company remains a defensive play with significant upside potential. The streaming giant is positioned as a recession-resistant form of entertainment and is making a major push into advertising, which is expected to become its primary growth driver in coming years. Netflix has demonstrated pricing power with its ad-free tier and continues to add subscribers. The stock currently trades at a forward price-to-earnings ratio of approximately 18.5 times 2027 analyst estimates.

Oracle has emerged as a key battleground in the artificial intelligence sector, driven by major expansion in its cloud computing infrastructure. The company reported a backlog of $664 billion as of the end of the second quarter. However, Oracle carries substantial debt and is currently burning cash. To manage this, the company has adopted creative financing strategies, such as establishing a separate entity to purchase and lease out chips. While this structure adds risk, cloud computing economics typically offer payback periods of two to three years or less. If the cloud model proves sustainable, Oracle’s high leverage and depressed stock price could generate significant upside.

ServiceNow has suffered alongside the broader software-as-a-service sector in 2026, despite being well-positioned for the agentic AI era. Its platform is deeply integrated into corporate operations, with its configuration management database linking hardware, software, cloud services, and business processes. ServiceNow is leveraging AI and cybersecurity to drive growth, aiming to become a leading orchestration platform through its AI Control Tower solution. As AI agents proliferate across vendors, the need to monitor and secure them within organizations is growing. The stock trades at a forward price-to-sales multiple of 7.5 times 2027 analyst estimates.

AppLovin shares have been pressured by increased competition from Unity Software and a slight miss in second-quarter earnings. Despite these headwinds, the company continues to grow rapidly. Revenue increased by 53% last quarter to $1.9 billion, while adjusted earnings per share surged 66% to $3.76. The company expects third-quarter revenue to rise between 46% and 48%, aided by model improvements and entry into the consumer vertical. Citigroup analysts noted that AppLovin has shown the fastest growth in this vertical over the past five months. Additionally, a recent Jefferies Financial Group survey indicated that advertisers plan to increase their e-commerce advertising spend with AppLovin in both the fourth quarter and throughout 2027.