IBM has been transforming its business in recent years and has made great strides in quantum computing.
Pinterest is no longer just an online vision board, but an AI-powered shopping discovery platform.
Both stocks trade at cheap valuation multiples, providing investors with opportunities.
10 stocks we like better than International Business Machines Corporation ›
While tech stocks continue to lead the market higher, that doesn’t mean there aren’t still bargains to be found in the sector. Both international business machine(NYSE: IBM) and interest(NYSE: PINS) It currently looks underappreciated and seems primed for a bull run in 2026 and beyond.
Some may still think of IBM as an old-school technology company, but it has been undergoing a massive transformation over the years. The company spun off its lower-margin information technology infrastructure services business back in 2021 and has been focusing on higher growth opportunities. Still, the stock remains relatively cheap, with a forward price-to-earnings (P/E) ratio below 23 and a forward price-to-earnings (PEG) ratio of about 0.26, based on analyst forecasts for 2026. Stocks with a positive PEG ratio below 1 are generally considered undervalued.
The company’s artificial intelligence (AI) products, including Watsonx and Red Hat AI, have received strong interest. It also has a partnership with Anthropic to embed its Claude large language model (LLM) into IBM’s software portfolio to boost its AI capabilities. Meanwhile, IBM’s z17 mainframe platform has been helping drive hardware growth with its advanced artificial intelligence inference capabilities. In the third quarter, this helped its software business grow 10% and its infrastructure business grow 17%.
What excites investors most, however, is the company’s progress in quantum computing. Not only is IBM involved in this emerging technology, but it’s also investing significant resources in its efforts to become a “quantum-first” company. It has taken a two-pronged approach to quantum chips. Its Quantum Nighthawk chip has been redesigned to increase connectivity beyond traditional computers, while its experimental Quantum Loon chip is pioneering what the company calls “practical, efficient quantum error correction.”
At the same time, its Qiskit software platform is the top open source platform in the field of quantum computing and is optimized for IBM’s hardware.
Image source: Getty Images
Based on analyst forecasts for 2026, the forward P/E ratio is below 12, interest(NYSE: PINS) is one of the cheapest growth stocks on the market today. The social media company is on a roll, with revenue growing 17% last quarter and adjusted EBITDA soaring 24%.
Its growth is led by international markets, with both its customer base and ARPU (average revenue per user) growing. The company has partnered with Alphabet to better monetize users in emerging markets, and the strategy is showing signs of working.
Meanwhile, Pinterest is experiencing strong growth in Europe. Last quarter, the number of monthly active users in Europe increased by 8% to 150 million, and ARPU increased by 31% to US$1.31. Meanwhile, in the “rest of the world” (which includes all regions except North America and Europe), monthly active users increased 16% to 347 million, and ARPU increased 44% to $0.21.
The company currently has far more international users than in the U.S. and Canada (103 million), so the opportunity to monetize it better is huge.
At the same time, the company has been transforming itself from a simple online vision board into an AI-powered discovery shopping platform. The company developed a multi-modal AI model that can identify multiple objects in a photo and provide shopping links for each object, helping to enhance its visual search capabilities. It also uses AI to create shoppable collages based on users’ tastes, has a feature that lets users try on clothes virtually, and even has an AI assistant that can help users shop.
Meanwhile, Pinterest has been leveraging AI and its Performance+ suite to improve its platform for advertisers. Advertisers can now use artificial intelligence capabilities to create better ad campaigns and even link their products to Amazon checkout. The platform can also help identify users with strong purchase intent, helping them bid accordingly and increase conversion rates.
This is not your old Pinterest. The company has transformed its platform, and Gen Z is now its largest and fastest-growing demographic. If the company continues its strong growth, the stock should rise sharply in 2026.
Before buying International Business Machines Corporation stock, consider the following factors:
this Motley Fool Stock Advisor The analytics team has just identified what they believe is 10 Best Stocks Investors can buy now… and International Business Machines Corporation isn’t one of them. The 10 stocks selected could generate huge returns in the coming years.
consider when Netflix This list was created on December 17, 2004… If you invested $1,000 when we recommended, You will have $490,703!* or when NVIDIA This list was created on April 15, 2005… If you invested $1,000 when we recommended, You will have $1,157,689!*
Now, it’s worth noting stock advisor The total average return is 966% — outperformed the market compared to the S&P 500’s 194%. Don’t miss the latest top 10 list, available via stock advisorand join an investment community built by individual investors for individual investors.
See 10 stocks »
*Stock Advisor returned on January 5, 2026.
Geoffrey Seiler works at Pinterest. The Motley Fool has posts and recommendations on International Business Machines and Pinterest. The Motley Fool has a disclosure policy.
Two of the Cheapest Stocks Poised for a Bull Run Originally Posted by The Motley Fool
