Figma Stock Rebounds 25% as Morgan Stanley Call Oversold Tech – Time to Buy or Sell?
Figma shares are bouncing from deeply oversold levels as a broader software rebound and renewed AI optimism help stabilize sentiment after..
Quick overview
- Figma shares have rebounded sharply from deeply oversold levels, rising to $25 after a prolonged decline that saw them drop below $20.
- The recovery is supported by renewed optimism in the software sector, driven by positive sentiment from major financial institutions and endorsements from industry leaders like OpenAI's Sam Altman.
- Despite the recent gains, technical resistance remains a concern, with significant hurdles to overcome before confirming a sustained upward trend.
- Investors are cautiously optimistic, viewing the recent rally as a potential relief rather than a definitive trend reversal.
Figma shares are bouncing from deeply oversold levels as a broader software rebound and renewed AI optimism help stabilize sentiment after months of heavy selling.
Software Rebound Lifts a Beaten-Down Name
Figma shares have been locked in a steep downtrend since peaking on August 1, sliding relentlessly and dipping below $20 in early February 2026. On Tuesday, however, the stock traded sharply higher, touching $25, as software names extended a third consecutive day of gains.
The rebound has been supported by renewed confidence in the software sector following a period of intense AI-driven volatility. Investors appear increasingly willing to step back into select names after weeks of indiscriminate selling, particularly those perceived as oversold.
A key catalyst came from JPMorgan Chase, which published a note arguing that the recent plunge in software stocks represents an opportunity rather than a warning sign. The bank encouraged investors to rotate into higher-quality software names that are relatively resilient to AI disruption, highlighting companies such as Microsoft and CrowdStrike. While Figma was not explicitly named, the broader shift in sentiment lifted the entire sector.
Adding to the momentum, Goldman Sachs CEO David Solomon described the software sell-off as “overdone” and “too broad,” reinforcing the view that recent price action may have overshot fundamentals.
Deep Losses Attract Opportunistic Buyers
Figma is not viewed as a defensive software name on the same footing as large incumbents, but its collapse has been severe. At one point, the stock was down more than 85% from its highs, pushing valuations to levels that attracted speculative and opportunistic buying.
After peaking near $122 in August, Figma’s shares entered a prolonged decline, shedding more than half their value and bottoming out around $50 last week before extending losses toward the low-$20s. That relentless slide left investors cautious, but recent price action suggests that selling pressure may be easing.
Over the past week alone, Figma has rallied roughly 35%, including a standout 14% gain in a single session, signaling what could be an early attempt at base-building rather than a full trend reversal.
OpenAI Endorsement Reignites Interest
A major sentiment shift followed comments from OpenAI CEO Sam Altman during the DevDay conference in San Francisco. Altman showcased Figma’s integration with ChatGPT, which now counts more than 800 million monthly users.
He highlighted the new Apps SDK, allowing third-party applications such as Figma to integrate directly into ChatGPT’s interface. In a live example, Altman demonstrated how a user could sketch a product flow and ask Figma to convert it into a structured diagram within the ChatGPT environment.
The high-profile endorsement positioned Figma as a meaningful participant in the expanding AI-powered application ecosystem, reigniting optimism around its long-term relevance.
Technical Picture Still Demands Caution
Despite the rally, technical resistance remains a challenge. Shares climbed to around $25.25, but the 20-day simple moving average has capped upside so far. To confirm a shift in trend, buyers would need to reclaim multiple moving averages, with heavier resistance clustered closer to the $45 area.
FIGMA Chart Daily – Buyers Testing the 20 SMA
Until those levels are cleared, the move may be best viewed as a relief rally rather than a confirmed uptrend.
Outlook: Relief Rally or Early Turn?
Figma’s rebound highlights how quickly sentiment can change when oversold conditions collide with positive sector signals and high-profile validation. While the recent bounce is encouraging, sustained upside will depend on follow-through, technical confirmation, and continued confidence in the broader software recovery.
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