Wharton’s Jeremy Siegel Says Wall Street Is Dead Wrong About Bubble - 3 Blue-Chip Stocks At Bargain

1999 and 2000 were far more expensive than we have today. I think there's three things worrying the market. First of all, obviously what's going on in Iran. And by the way, if we do get a pause and we do get that straight opening, I it's a 10% pop on the S&P I think with without question. Um there is a little pause about hey what's going on in the AI situation. I mean on in the 5 a.m. hour where we had uh Dan Ives saying it's an arms race and I kept saying well is an arms race always the best thing? But I mean it is a revolution of uh you know fundamental value. You know the bull market is in the early stages but I think that that's what's keeping these concerns I think are keeping the market at least a lid on it for now. Everywhere you look, Wall Street doomongers claim we're trapped in the most expensive market in history. The recent wave of market panic makes that claim look convincing on the surface. But Wharton finance legend Jeremy Seagull calls the underlying premise completely absurd. The hard data proves it. At the height of the 1999.com bubble, the NASDAQ skyrocketed to a staggering 100 times price to earnings multiple while the tech sector hit 80 times. Today, the NASDAQ's forward PE sits near a far more reasonable 21.5 times. With broad money supply expanding at a 9% annualized rate and geopolitical headlines suppressing sentiment, Seagull asserts that widespread investor anxiety isn't a signal to panic. It's the ultimate buying opportunity. Seagull's core rationale hinges on a critical market transition. As Wall Street's fear over massive infrastructure capital expenditure cools, real profit growth rotates directly to enterprise software adopters leveraging cheaper compute power to supercharge their operating margins. While retail investors chased overcrowded momentum plays, three longbeaten down tech juggernauts sat under persistent selling pressure for months. But that bearish thesis just fundamentally shattered. Accelerating enterprise contracts, high-value AI licensing deals, and structural margin expansions have quietly turned these former Lagards into cash flow powerhouses. All three have officially bottomed out, expanded their margins, and are coiling for a massive structural breakout. Here is the data breakdown. Leading our analysis is digital media titan Adobe Inc., ticker ADBE, a company that the market has mistakenly written off as a victim of generative AI, creating one of the most compelling value setups in tech today. While narrative-driven selling pressured the stock for months, the actual financial reality paints a radically different picture. In its recent second quarter, revenue surged 13% year-over-year to a record 6.62 $62 billion, backed by 14% subscription growth and a massive $27.1 billion in total annualized recurring revenue. The core thesis here is straightforward. Artificial intelligence is not destroying Adobee's competitive mode. It is expanding it. Contrary to fears that generative tools would cannibalize creative software, the sheer abundance of AI generated digital content is driving unprecedented demand for professional platforms to edit, govern, distribute, and monetize that content at scale. Adobe's AI first offerings have already crossed $500 million in ARR, tripling year-over-year, while its Firefly model ecosystem saw a 50% sequential jump in ARR. Furthermore, web traffic seeking its native digital capabilities expanded 35% year-over-year, pushing monthly active users past 850 million. Management is deliberately funneling millions of these new users into a high converting premium pipeline, setting up a massive recurring revenue monetization ramp as users transition to paid tiers and credit packs. Financially, Adobe remains an absolute cash machine, generating over $2 billion in operating cash flow in a single quarter and repurchasing $ 8.5 million shares to consistently reduce share count. Management has raised its fullear revenue outlook up to 26.6 billion alongside EPS guidance near $24.40. Yet, despite these accelerating fundamental tailwinds, ADBE trades at an extraordinarily compressed forward earnings multiple near 10.2 times, a deep discount relative to historical tech averages. As corporate AI budgets pivot from basic infrastructure toward high margin enterprise workflow integration, this creative juggernaut is primed for a massive structural rerating as Wall Street catches up to the real numbers. Transitioning seamlessly from creative workflows to enterprise automation. Our second opportunity is Service Now, ticker N. A software powerhouse that was dragged down by fears over seat-based pricing disruption, but is now delivering explosive operational numbers driven by autonomous AI execution. While Wall Street was busy pricing in worst case scenarios, Service Now crushed its second quarter earnings, delivering $3.99 billion in total revenue and accelerating subscription growth to 24.5% year-over-year, beating its own guidance midpoint by $60 million. The true driver of this turnaround isn't just incremental growth. It's the massive enterprise adoption of now's agentic AI suite, including tools like now assist and the newly launched consolidated enterprise engine auto. Over the last 9 months, Agentic deployments skyrocketed by 9-fold, while AI related bookings surged 40% sequentially in the second quarter alone. Annualized contract value tied to AI has already scaled to approximately $1 billion, accounting for nearly 7% of total fullear subscription guidance. Furthermore, the company's remaining performance obligations, a crucial measure of total contracted future revenue, surged 21% year-over-year to a staggering $29 billion, prompting management to raise its fullear subscription revenue outlook to as high as $15.78 billion. This operational efficiency is flowing directly to the bottom line, generating $634 million in quarterly free cash flow, up 19% year-over-year, and supporting an exceptionally strong fullear free cash flow margin of 35%. While competitors struggle with core organic growth deceleration, now maintains an organic growth profile approaching 19%, significantly outpacing legacy peers like Salesforce. Yet, despite these surging metrics and top tier enterprise retention, NOW's valuation compressed significantly to around 19.7 times forward earnings, leaving shares trading at a massive 52% discount relative to its 3-year average multiple. As corporate buyers move rapidly from testing simple chat bots to deploying complex automated cross-ep departmental AI agents, Service Now is uniquely positioned to capture massive market share and drive substantial margin expansion. Building directly on this surge of autonomous AI enterprise agents, our third stock is zero trust security pioneer Zcaler, ticker ZS, a titan that was pulled back by short-term sales execution hurdles, creating an extraordinary entry window right as AI deployment amplifies its core value proposition. While macro weakness and executive transitions in sales leadership temporarily weighed on sentiment, Zcaler's underlying business engine delivered a stellar third quarter, generating 850 million in revenue, a 25% year-over-year surge that comfortably beat Wall Street guidance. The structural bullcase for Zscaler rests on a fundamental reality that the market is severely underpricing. Cyber security is arguably the most AI resilient business model in all of enterprise software. As autonomous AI agents proliferate across corporate networks, operating at lightning speeds with minimal human oversight, the risk surface expands exponentially. Enterprises cannot simply build in-house security or migrate away from zero trust architecture. They must secure every autonomous agents access to data and applications. This tailwind expanded Zcaler's non-GAAP operating margin by 100 basis points in the recent quarter, backed by a formidable balance sheet, holding 3.5 billion in cash against just $1.7 billion in debt. While conservative near-term guidance of 17% growth for fiscal year 27 reflects temporary sales execution capacity rather than a drop in market demand, the structural runway points directly toward long-term operating leverage and a path toward 30% net margins. With operating leverage set to drive gap profitability over the coming quarters, Zscaler's valuation has compressed to an exceptionally attractive price toearnings growth ratio near 1.0 0 times relative to its solid growth trajectory. As Wall Street recognizes that Agentic AI is accelerating threat vectors rather than disrupting security modes, Zcaler is primed for significant margin expansion and a powerful market rerating. Jeremy Seagull's framework makes one thing clear. Fear creates mispricing and mispricing creates generational wealth. As infrastructure capex normalizes, Adobe, Service Now, and Zcaler represent the exact enterprise AI adopters set to deliver explosive cash flow and margin expansion. Hit that like button, subscribe for deeper datadriven stock breakdowns, and drop a comment below with which tech stock you're buying