Rebound Watchlist: 7 High-Quality Stocks in a Drawdown

We are publishing this without a paywall

Before we share the top 7 stocks in our watchlist for April, I want to share Rebound Capital’s view on a few sectors of the US stock market. Here’s our sectoral view, along with the opportunities and key risks we see in each.

Alphabet, Amazon, Meta, Microsoft, and Nvidia have fallen by 15% - 30% from their all-time highs (and recovered strongly post the Iran ceasefire).

During the recent earnings season, all the Cloud Service Providers (AMZN, MSFT, and GOOG) announced substantial increases in capital expenditure for 2026. This is a direct result of rising computing demand driven by the expansion of AI use cases across businesses. Although we can understand why they are investing aggressively, this rise in CapEx makes Amazon, Google, Microsoft, and Meta less attractive to investors, as their capital intensity has increased materially (versus when they were investing in the cloud pre-AI). 

Amongst Megacaps, we expect Amazon, Google, and Meta to thrive in the AI era. Meta has demonstrated the ROI of its AI investments, with accelerating revenue growth from its advertising business (growing ~25% YoY). We expect Amazon and Google to be the lowest cost providers of AI cloud services in the coming years (helped by their custom silicon GPU programs). On the other hand, Microsoft’s competitive advantage is most at risk; its latest enterprise productivity software release (E7) in May will serve as a crucial test of its innovation in the AI era.

We see Nvidia continuing to lead the AI industry. Its stock dropped due to fears that AI CapEx can’t keep growing in the coming years. We doubt that analysis because we are just at the beginning of AI boosting all parts of the economies of the developed world. We are massively compute-constrained and will remain so in the coming years. The sharp increase in ARR at Anthropic underscores the exponential rise in demand for AI. This will directly help Nvidia’s business (as the largest provider of GPUs).

We have previously written on the software sector here. To thrive in an AI world, software firms will need to:

The era of selling features for $20 per month per seat is gone. Being GAAP unprofitable after 20 years (Atlassian) is also over. The disruption is real. For most SaaS companies, the biggest advantage was having smart people develop code and customers accustomed to their UI. These are no longer valid competitive advantages.

The most obvious and direct beneficiary of the ongoing AI revolution. We will divide semiconductors further:

We are bullish on TSMC's business prospects (It has a monopoly in the logic foundry market). We expect multiple years of strong >20% growth here. Valuations are expensive, though.

Memory manufacturers like Micron, SK Hynix, and Samsung are trading at steep market caps relative to the past. While we agree that the AI revolution probably means that ‘this time is different,’ we remain unsure about the extent to which the industry's cyclicality has reduced (i.e., higher margins for the cyclical through). These stocks are in the ‘too hard’ pile for us. The short term looks terrific for them. But we are unable to model the medium- to long-term economics of these businesses.

ASML, Lam Research ($LRCX), KLAC, and Applied Materials ($AMAT) supply equipment to the manufacturing companies listed above.

These stocks have performed very well recently, and there's a good reason for that. All of these companies operate in duopoly or oligopoly markets (ASML and KLAC are monopolies at the leading-edge nodes). Spending on equipment is also expected to increase significantly from about $100 billion last year to over $200 billion around 2030. The valuations reflect this, so we're not currently seeking exposure here.

Another key risk for the Semicaps is that all of these firms derive a significant (>25%) portion of their revenue from China, and the US government may decide to reduce exports of Semicap equipment to China by restricting the sale of more and more equipment and services. This can represent a critical short-term headwind for these firms.

This is the segment we are most bullish on. Both AMD and Nvidia were in drawdowns recently, due to the expectation that AI capex may have peaked. But we disagree and expect the amount spent on AI computing chips (GPUs and CPUs) to secularly rise in the coming years. Refer to our write-up on Nvidia and AMD for more details.

Many restaurant companies (Chipotle, Dutch Bros, Starbucks) and consumer discretionary firms (Nike, LVMH, Lululemon, Birkenstock) are in drawdowns. With consumer spending weakening and AI set to impact the job market in the coming years, investors must be very selective in their bets in this sector. We are trying to identify companies that are still expected to grow their revenues robustly (double-digit %) for many years to come.

We will avoid turnaround opportunities in this sector because we're uncertain about how much AI will impact the job market in the coming years. In this backdrop, we don’t want to risk betting on a brand that may have plateaued.

With our sector outlook complete, we'll now highlight our most closely watched stocks. None of them are recommended for purchase without further analysis. However, each one deserves a closer look. Read to the end to vote on which company we should focus on for our next deep dive.

Zoom became a verb during the pandemic and then, just as quickly, became a punchline. The stock has spent four years trying to escape that narrative (it’s down ~80% from its all time highs). The stock is down roughly 14% from its January highs, due to muted growth in its core business.

The business is not growing as much as it was in 2020, but the bears may be too pessimistic about the company. Full-year fiscal 2026 revenue came in at $4.87 billion (4.4% YoY growth), and the company has guided to breaching $5 billion in FY2027. The company holds $7.8 billion in cash and completed $2.4 billion in share buybacks during the last 2 years. That is not the capital allocation of a business in distress. Zoom also owns $2B-$4B of Anthropic (our estimate) and, in our view, will soon be worth >$5B-$6B closer to Anthropic’s IPO. Excluding cash and Anthropic’s stake, the core business trades at ~5x-6x earnings!

(Note: the ownership figures are our estimates and may be off)

In Zoom’s Q4 FY2026 earnings, revenue beat expectations at $1.25 billion, but earnings per share of $1.44 missed the consensus. More importantly, the full-year adjusted EPS guidance disappointed, and investors who had been hoping for margin expansion instead got a message about continued investment. The stock slid roughly 15% after the earnings report.

The market’s concern is structural, though. Microsoft Teams is bundled into the Microsoft 365 suite used by millions of enterprises, and it continues to erode Zoom’s pricing power at the low end. The fear is that Zoom gets squeezed from below by cheap bundled alternatives and from above by more sophisticated agentic AI tools that don’t require a video call at all. There is also the fear that, as AI disrupts the labor market, Zoom’s per-seat pricing model will be under pressure.

Adding to the uncertainty, CEO Eric Yuan stopped breaking out AI-driven ‘New Product Revenue’, saying Q4 FY2026 would be the last quarter for that metric, a move some interpreted as burying a number that had become harder to grow impressively.

The bull case rests on Zoom AI Companion, which tripled year over year, and on the Contact Center business. If Zoom can convert its AI engagement into incremental revenue, moving beyond the freemium AI Companion toward paid enterprise AI agents, it could re-rate as an AI productivity platform rather than a video conferencing utility.

Our interest in Zoom, though, stems from the ~$8B in cash and the $5B-$6B in the Anthropic stake (if Anthropic goes public at a valuation>$500B). Adding up the cash and the Anthropic stake equals ~$14B. Zoom’s market cap is $24B, implying the core business trades at ~5.5x PE!

Our biggest issue with Zoom is that the upside is capped at 20%-30% from current levels, even if our thesis is right. But if the stock falls sharply due to market conditions, we may be potential buyers at $70/share or below.

Accenture is the world’s largest consulting firm. We have previously written about Accenture here. More recently, Accenture has been trying to become the company that enterprises call when they want to implement AI. For example, in 2024, Accenture trained 30,000 employees to implement Nvidia’s technology in enterprises. It now claims to have 85,000 AI and data professionals.

With over 780,000 employees and a presence in nearly every major global industry, it is also the most visible symbol of a market debate playing out in real time: does AI make consulting firms indispensable, or redundant?

In 2026, the market has leaned toward redundancy. Accenture shares are down roughly 50% from their 2025 highs.

The narrative turned sharply against Accenture in early February 2026 when a broad selloff in knowledge-work stocks accelerated. On 3rd Feb 2026, shares fell 9.6% amid fears that generative AI tools would reduce demand for billable consulting hours, leading to fewer humans needed for the work that makes up Accenture’s revenue model. The irony is that Accenture’s Q1 FY2026 results, reported in December 2025, showed $2.2 billion in advanced AI bookings, nearly doubling year-over-year, and record quarterly bookings of $20.9 billion overall.

The Q2 FY2026 results in March were also stable but similarly punished. Revenue of $18.04 billion beat estimates, and bookings hit a record $22.1 billion. The market focused instead on Q3 guidance that came in below expectations and on a comment from CEO Julie Sweet that federal government business would create a roughly 1% drag on FY2026 growth.

The broader structural fear that agentic AI systems will absorb the strategy and analysis work that Accenture charges $250 per hour for has not gone away. Accenture is also undergoing an $865 million restructuring while simultaneously mandating aggressive AI adoption internally, including tracking senior employee logins to AI tools.

The bull case is that Accenture is not being disrupted by AI; it is becoming the primary conduit through which AI enters the enterprise. Nearly 85,000 Accenture employees are now AI and data professionals, and the company has deep relationships with Google Cloud, Microsoft, AWS, and other hyperscalers. No AI tool sells itself into a Fortune 500 company; someone has to design the implementation, manage the change, and take accountability when it goes wrong. That is Accenture’s job.

The stock now trades around 16x trailing earnings (Accenture usually traded at >25x) with a dividend yield of 3%, levels not seen in years for a business that has historically compounded at high-single-digit revenue growth. If revenue growth reaccelerates toward the 7–9% range the market previously rewarded, the re-rating could be substantial.

Moody’s is one of the most durable oligopolies in global finance. For 125 years, it has sat at the center of global debt markets as an essential gatekeeper. No significant bond issuance occurs without a Moody’s or S&P Global rating. The business has two engines: Moody’s Investors Service (MIS), which rates debt and earns fees whenever companies or governments issue bonds, and Moody’s Analytics (MA), which sells risk software and data tools with recurring subscription revenue. Warren Buffett has called it one of his forever stocks.

First, geopolitical tensions and interest rate volatility in January and February 2026 raised fears that debt issuance would freeze - a direct hit to MIS revenue. If companies and sovereigns stop issuing bonds, Moody’s fees drop with them. The market sold the stock as if a prolonged issuance drought were the base case.

The second blow came when S&P Global reported weak Q4 2025 earnings and disappointing 2026 guidance, missing the 2026 consensus EPS estimate of $19.96 with a forecast of $19.40–$19.65. Moody’s fell 5% in sympathy, along with FactSet, MSCI, and other financial data names. The sector-wide repricing hit firms that had done nothing wrong operationally. This earnings miss was compounded by the market’s fear that many of these financial firms will now be disrupted by companies like Anthropic, which own the foundational LLMs capable of performing bond analysis.

There is also a longer-tail concern: companies like Bloomberg and others are beginning to offer automated credit analysis tools (using AI) specifically for private placements. Moody’s management has pushed back firmly on this narrative, arguing that ‘AI can build a model, but it can’t be calibrated on actual loss data’ - a reference to the firm’s proprietary database of historical defaults, the largest in existence, which regulators require banks to use for risk assessments.

Moody’s Q4 2025 results, reported in February, were genuinely impressive: adjusted EPS of $3.64 beat the $3.42 consensus by 6%, and the company guided 2026 adjusted EPS of $16.40–$17.00 - a range that was above analyst expectations. CEO Rob Fauber used a BofA conference in March to make a compelling case: an estimated $68 trillion in global infrastructure investment needs, an accelerating military buildup cycle across NATO, and a massive 2028 refinancing wall make debt issuance a structural necessity regardless of near-term volatility.

Private credit, a rapidly expanding segment, is also a tailwind. Moody’s private credit revenue in MIS grew nearly 60% in 2025, and its partnership with MSCI to bring credit analytics to private market investors positions the firm at the center of one of the fastest-growing parts of global finance. Even though private credit is in a spot of bother now, we do expect the business to continue to grow in the coming years.

A few more quarters of strong performance, and the market will realize that the AI threat to Moody’s is minimal. Due to its proprietary data, which serves as the basis for any AI to work from. The market may not rerate Moody’s, as it’s still trading at a 26x NTM PE ratio, which seems fair (not cheap yet).

FICO’s score is embedded into virtually every mortgage, auto loan, and credit card decision made in the United States. It has achieved something almost impossible in finance: a brand that is also a regulatory standard. And yet the stock is down roughly 50% from its late 2024 highs, a collapse more commonly associated with speculative tech than with a near-monopoly financial utility. Refer to our deep dive on FICO here.

The short answer is the market believes that FICO’s monopoly has been cracked. The Federal Housing Finance Agency’s decision to allow VantageScore 4.0 alongside FICO scores for mortgages delivered to Fannie Mae and Freddie Mac sent a jolt through FICO’s valuation. For decades, FICO had a legally mandated position in the mortgage market. The new ‘bi-merge’ credit report framework and the multi-model scoring environment effectively ended that protected status.

Investors interpreted this as the beginning of potential pressure on FICO’s pricing power. The stock had been trading at over 50x forward earnings in mid-2025; the regulatory change catalyzed a violent derating.

But the most significant concern is that AI-driven alternative scoring models could commoditize credit assessment, which has weighed on sentiment.

While the stock has been halved, the actual business has barely slowed. Q1 fiscal 2026 results showed revenue up 16% year-over-year and scores revenue up 29%, with non-GAAP operating margins expanding over 400 basis points to 54%. Mortgage originations revenue, the very segment the market is most worried about, grew 60% year-over-year in Q1.

Five major resellers, representing 70–80% of the reseller market, have already signed on to the FICO Mortgage Direct Licensing Program, which streamlines score access and reduces lender costs. Wells Fargo analysts have noted that lenders have minimal incentive to abandon FICO for VantageScore given the transition costs and the lower predictive power of competing models. FICO Score 10T, the next-generation model, is meaningfully more predictive than alternatives and is being rolled out through Direct Licensing in 2026.

At roughly 35x forward earnings, FICO is being priced for much slower growth than in the last few years. If the mortgage market reaccelerates and the VantageScore threat proves more theoretical than real, the stock has a compelling path back toward its prior highs in the coming years.

Coinbase is the definitive crypto exchange for the US market. Its regulatory positioning, custody infrastructure, and brand trust give it an enduring edge over offshore competitors.

Q4 2025 earnings, reported in February, were a clear disappointment. Revenue fell by 5% from the prior quarter to $1.78 billion, missing the $1.85 billion consensus. The non-GAAP EPS was $0.66, 37% below the $1.05 street estimate. The company also posted a net loss of $667 million for the quarter after marking down the value of its crypto holdings and investments, compared to a $1.3 billion profit in the same period a year earlier.

The root cause of the drop in the stock since July 2025 highs has been a cold crypto market. Bitcoin and major tokens fell sharply from their late-2024 and early-2025 highs, draining trading activity across the digital asset market. Spot trading volumes, which are still the core driver of Coinbase’s revenue, collapsed alongside prices. Cryptocurrency transaction revenue has fallen ~33% since its peak in the Q4’2024 quarter.

The broader structural concern for Coinbase is cyclicality. Despite building out stablecoin infrastructure, custody services, derivatives (via the Deribit acquisition), and the Base Layer 2 network, the company’s financials are still largely a function of where Bitcoin trades.

The long-term infrastructure story at Coinbase remains intact. Average USDC (stable coin pegged 1:1 to the dollar) balances on-platform grew to roughly $17.8 billion in Q4 2025 (~117% YoY growth), subscription and services revenue grew 23% year-over-year in 2025, and the Deribit acquisition has meaningfully expanded derivatives capabilities. CEO Brian Armstrong’s declaration that “we store more crypto than any other company in the world” is not a boast and reflects a genuine moat.

US stablecoin legislation, the GENIUS Act, could be a meaningful catalyst. If USDC becomes embedded in the US payment infrastructure, Coinbase, which shares economics on USDC with Circle, stands to benefit substantially. The company’s Q1 2026 report, due in May, will be closely watched for signs that trading volumes have stabilized after the Q4 2025 weakness. With $11.3 billion in cash and equivalents and no near-term solvency concerns, Coinbase has the runway to wait out the cycle. Excluding cash and equivalents from market capitalization, the core business trades at ~31x PE ratio. This seems reasonable for a secularly growing platform.

Robinhood is the brokerage that democratized investing for a generation of retail traders. Its mobile-first, commission-free platform pulled millions of young Americans into the market for the first time, and then built a genuinely impressive financial services business around them, adding Gold subscriptions, margin lending, crypto trading, futures, prediction markets, and international expansion.

After rising by more than 200% in 2025 and being added to the S&P 500, the stock has lost ~55% of its value since its 2025 high.

Robinhood entered 2026 at a valuation that left no margin for error. The stock was trading at a price-to-sales ratio of over 25x, more than twice its historical average since going public in 2021. When growth began to slow, the derating was brutal and fast.

Q4 2025 earnings, reported in February, captured the problem in a single data point: crypto transaction revenue fell 38% to $221 million YoY, driven by sharply lower digital asset trading volumes as Bitcoin retreated from its highs. Total revenue of $1.28 billion came in below the $1.34 billion analyst consensus, even as EPS of $0.66 beat the $0.63 estimate. Revenue decelerated to 27–28% growth from the triple-digit rates of mid-2025.

Prediction markets, which had been a genuine source of investor excitement, also face growing competition from Polymarket, Kalshi, and potentially others. The narrative that prediction markets could be as large as crypto for Robinhood has cooled alongside the actual crypto market.

Despite the selloff, Robinhood’s underlying financial architecture is stronger than it was two years ago. The company generated $4.5 billion in revenue for full-year 2025, with earnings of $2.05 per share, a legitimately profitable brokerage business. Gold subscribers, who pay monthly for premium features, continued to grow rapidly and represent a more stable revenue stream than transaction fees. The platform’s young, asset-generating user base means ARPU should increase structurally over time, even in quiet markets. A valuation of ~35x PE is expensive but fair for buying into a management team that has consistently executed and diversified its platform.

A revival in crypto trading volumes, which history suggests is a matter of when, not if, would be the most powerful near-term catalyst. Robinhood’s $1.5 billion share buyback program also provides a floor for the stock.

MercadoLibre is Latin America’s Amazon and PayPal combined. It operates the dominant e-commerce marketplace across Brazil, Mexico, Argentina, and a dozen other markets through Mercado Libre, and runs the leading fintech platform in the region through Mercado Pago. The company is building logistics infrastructure, consumer credit, digital banking, and advertising capabilities simultaneously — all in a region of 650 million people where e-commerce and financial inclusion are still in early innings. It is one of the most exceptional growth businesses in the world.

The stock has fallen roughly 34% from its mid-2025 highs.

MercadoLibre’s Q4 2025 earnings, reported in late February, were a classic case of a great business disappointing a market that had priced in perfection. Revenue beat estimates, growing 39% for the full year to reach $28.89 billion. But earnings (EPS) growth for 2025 slowed to 4.5% year over year, as the company made heavy investments in logistics, credit expansion, and new market penetration, deliberately compressing near-term margins in pursuit of long-term dominance. Analysts at Morgan Stanley and UBS (and others) both lowered price targets following the report.

The headwinds go beyond a single quarter. Brazilian e-commerce has attracted intensifying competition, with Shopee (backed by Sea Limited) aggressively expanding in the region and Amazon continuing to invest. Brazilian regulators have increased scrutiny of fintech operations, adding compliance costs and uncertainty to Mercado Pago’s expansion plans. The recent quarter showed reduced margins for MELI in Brazil due to a lower free shipping threshold. This is good for the business's long-term health, but has caused weakness in near-term results.

The broader market has also become more risk-averse toward EM-exposed names. Amid dollar strength and geopolitical uncertainty, investors have rotated out of stocks with significant exposure to Latin America.

The company's fundamentals remain solid. Full year 2025 revenue of $28.89 billion grew 39%, and the company has announced a $10.9 billion investment in Brazil alone for 2026 - a 50% increase from 2025. Mercado Pago is evolving from a payment wallet into a fully-fledged digital bank, offering savings, investments, and credit products with higher structural margins than its commerce platform.

Mercado Libre’s advertising business is still in its infancy. This will be a high-margin business layered on top of the core ecommerce business in the coming years.

At around $1,770 per share, MELI trades at roughly 32x forward earnings. The business is executing a deliberate, Amazon-like margin sacrifice strategy in its highest-growth markets. We will look to enter MELI once we are certain the business’s long-term economics are solid (given that Amazon, MELI, and Shopee coexist in a stable oligopoly).

That’s it for now. Stay tuned for our upcoming post, where we will share our latest research notes and valuations for multiple stocks, including Netflix, Disney, Meta, Lam Research, KLAC, TSMC, Copart, and Mercado Libre.

If you have reached this far and enjoyed the read, please ‘Share’ this piece with a friend.

Rebound Capital’s work is provided for informational purposes only and should not be construed as legal, business, investment, or tax advice. You should always do your own research