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Although the stock market entered 2026 at its second-priciest valuation in 155 years, based on the S&P 500's (SNPINDEX: ^GSPC) Shiller Price-to-Earnings (P/E) Ratio, bargains can be unearthed for investors willing to seek them out.

For example, the S&P 500 and iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) have historically moved in tandem. But as of the closing bell on April 10, the S&P 500 was 2% below its all-time high, while this prominent software ETF was 37% below its record close. This suggests software stocks are ripe for the picking, with Adobe (NASDAQ: ADBE) and Microsoft (NASDAQ: MSFT) representing the low-hanging fruit for investors.

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Software stocks have been taken to the woodshed since late October due to fears that artificial intelligence (AI) will reduce demand for high-margin software platforms or replace them entirely. Shares of Adobe are 46% below their closing high over the last year, primarily due to AI concerns.

However, the company's operating results tell a completely different story. Its AI-first annual recurring revenue more than tripled from the previous year during its fiscal first quarter (ended Feb. 27, 2026), and its high-margin subscription revenue jumped 13%. Though some view AI as a threat, Adobe is succeeding in embracing it and integrating AI into its existing platforms.

Something else to consider is the historically high switching costs away from professional platforms like Photoshop. Adobe has been building rapport with its clients for decades, and this intangible benefit isn't going away anytime soon.

To round things out, Adobe has a robust share repurchase program. Over the last 20 years, it has retired nearly a third of its outstanding shares, which has notably improved its earnings per share. Adobe's forward P/E ratio of 8.5 is the cheapest it's been in well over a decade.

Another brand-name software stock that's a screaming bargain, based on historical standards, is Microsoft. Concerns about AI pressuring enterprise software sales have played a key role in Microsoft's shares losing nearly a third of their value since late October.

But, like Adobe, Microsoft's operating results show little (if any) signs of weakness. The company's fiscal second-quarter operating performance (ended Dec. 31) highlights 15% constant-currency sales growth, led by its cloud computing and AI-driven segments. Azure, the world's No. 2 cloud infrastructure services platform by total spend, has seen its yearly sales growth reaccelerate to nearly 40% following the integration of generative AI and large language model solutions.

Additionally, Microsoft's legacy segments continue to deliver. Even though Windows and Office are well past their respective growth heydays, they're still dominant and capable of generating exceptionally high margins. Microsoft is able to use the cash flow derived from its legacy segments to invest in faster-growing initiatives and facilitate acquisitions.

Microsoft also sports an impressive capital-return program. In nominal dollars, no U.S. public company doles out more in dividend payments annually.

Finally, Microsoft offers a value proposition that hasn't existed in more than a decade. Its shares are trading at a forward P/E of 19.5, which is 34% below its average forward P/E ratio over the trailing half-decade, and the cheapest shares have been since the mid-2010s.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe and Microsoft. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.

Bargain Alert: 2 Brand-Name Software Stocks That Haven't Been This Cheap in Over a Decade was originally published by The Motley Fool