Figma (FIG) kicked off its Config conference by rolling out AI powered updates that add a code layer, motion and shader support, and custom plug in options, pointing to a seat plus consumption pricing shift.

Despite the fanfare around Figma’s new AI tools, the stock’s recent momentum has been weak, with the share price return down 9.66% over one day, 10.81% over seven days, and 55.22% year to date. This suggests the market is still reassessing growth potential and risk around its evolving business model.

If this kind of AI driven product shift has your attention, it could be a good moment to broaden your watchlist with a focused set of 61 profitable AI stocks that aren't just burning cash

With Figma stock down sharply this year yet carrying analyst targets well above the last close, the key question for investors is whether the current weakness signals a mispriced opportunity or whether the market already reflects future growth.

Most Popular Narrative: 10.4% Undervalued

Figma’s most followed narrative points to a fair value of $18.79 per share versus the last close at $16.84, framing today’s weakness as a valuation gap that hinges on execution rather than hype.

If we’re being calm and reasonable about it, the market is basically assuming around 20 to 25% revenue growth per year, net margins improving toward roughly 15 to 20% in five years, and a future P/E of about 30 to 40x once the company is properly profitable. That combination does not scream undervalued, but it also is not bubble territory. It just means the stock is priced for steady execution. If growth stays above 25% or margins push past 20%, there is real upside. If they fall short, the multiple likely tightens.

Want to see what sits behind that “steady execution” story? The narrative leans on strong revenue compounding, margin lift from scale, and a future profit multiple usually reserved for established software leaders.

Result: Fair Value of $18.79 (UNDERVALUED)

However, this steady execution story could be challenged if competitors close the AI gap faster than expected, or if Figma’s losses and AI spending weigh more heavily on sentiment.

Another View: Figma Through a Cash Flow Lens

The most popular Figma narrative points to fair value at $18.79 per share, but the SWS DCF model lands lower at $15.47, suggesting the stock is trading above that cash flow estimate. For you, the tension is simple: is the market overpaying for growth, or is the model too cautious?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Figma for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 43 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed mood around Figma has you on the fence, move quickly from headline reactions to the underlying data and judge the risk reward balance for yourself with 2 key rewards and 2 important warning signs

Looking for more investment ideas beyond Figma?

If Figma has sharpened your focus on where capital goes next, do not stop here; widen your search with a few carefully targeted stock ideas.

• Target resilience first by scanning companies with robust financial footing using the solid balance sheet and fundamentals stocks screener (48 results).
• Zero in on potential mispriced opportunities by reviewing the 43 high quality undervalued stocks that match your risk tolerance and time horizon.
• Prioritise stability and income potential by checking out the 9 dividend fortresses that combine yield with staying power.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.