Figma: Why Wall Street Continues Underestimating This Software Giant in 2026

The enterprise software sector has fallen dramatically out of favor with investors. Market participants are gripped by anxiety over artificial intelligence rendering established software solutions obsolete. Yet this pessimism may cause many to underestimating quality software companies that are actively adapting to the AI era. Figma stands as a prime example of this market misunderstanding.

Since its public debut in summer 2025, Figma’s stock has experienced a harrowing journey. After an initial surge in enthusiasm, the company’s shares have descended more than 75% from their peak valuations. For early investors, the experience has been disheartening. However, this dramatic repricing has inadvertently created a significant blind spot on Wall Street—one that investors may come to regret ignoring.

Market Sentiment vs. Market Reality

The software industry currently faces a credibility crisis of sorts. Investors have collectively turned away from nearly every software equity, united by a conviction that artificial intelligence will render conventional software applications redundant. While history will be the ultimate judge, there’s a crucial insight worth considering: technology sentiment typically precedes actual market disruption by many years. We witnessed similar cycles during the dot-com era in the late 1990s, when pessimism proved vastly premature.

It’s unlikely that established, deeply integrated software products will vanish overnight or in the near term. Such entrenchment protects these businesses more than many investors currently acknowledge.

Figma’s Operational Strength Defies Market Fears

What the market appears to be underestimating is Figma’s fundamental business momentum. The company’s financials paint a compelling picture:

• Revenue has reached approximately $1 billion on a trailing-12-month basis
• Analyst projections point to nearly $1.3 billion for the current year, followed by over $1.5 billion in the subsequent period
• The company maintains an exceptional 131% net revenue retention rate—a metric demonstrating that existing customers consistently expand their spending as they deepen Figma usage
• The business has achieved profitability sufficient to convert more than 25% of sales into free cash flow

These indicators collectively suggest a company operating at full throttle, not one threatened with obsolescence.

The Valuation Opportunity

The stock’s extended decline has inadvertently improved the investment opportunity. Figma’s current price-to-sales multiple has contracted to approximately 14 times revenue—an attractive entry point for a business positioned to expand revenues by 50% across the coming two years.

Consider the mathematical implications: even if the market maintains its current valuation multiple and Figma simply executes on Wall Street’s established growth expectations, shareholders would likely outpace the broader market’s returns. This downside protection exists before any re-rating occurs.

Should the pervasive AI-driven pessimism that currently weighs on software equities eventually dissipate—as it inevitably will—the path to substantially higher valuations becomes clear. This scenario could unlock significant additional upside for patient investors.

The AI Integration Advantage

Paradoxically, Figma exemplifies a modern software company fully embracing artificial intelligence rather than threatened by it. The platform enables users to create digital websites, products, and interfaces while collaborating in real time with colleagues. The company has systematically integrated AI capabilities and works seamlessly with third-party applications such as OpenAI’s ChatGPT.

Rather than facing displacement by AI, Figma is positioning itself as a platform where AI tools enhance creative workflows. This integration strategy directly contradicts the market’s prevailing narrative of software disruption.

The Case Against Underestimating Figma

The past months have certainly proven painful for shareholders. Yes, artificial intelligence concerns have deterred institutional investors from software equities broadly. Yet the case for underestimating Figma heading into 2026 appears increasingly difficult to defend.

The company’s accelerating revenue growth, expanding profitability, and reasonably valued stock price collectively suggest that market sentiment has swung too far in the bearish direction. Eventually—as with previous technology transitions—reality will catch up with market perception. When that shift occurs, those who have been underestimating Figma’s prospects may find their portfolios paying the price.

The combination of strong operational execution and an attractive valuation creates a compelling risk-reward scenario. For investors willing to look beyond current market anxiety, Figma represents precisely the kind of overlooked opportunity that produces outsized returns over time.