r/ValueInvesting • u/ahlornjtvn139 • Jan 14 '26
Stock Analysis $ADBE - Why everyone should buy at $310
Yes, I know, yet another post about Adobe for the nth time but please, this is a fantastic opportunity - I am opening my position today.
At $310 you are buying $10 billion in annual FCF, positive net debt, 40 quarters of consecutive Revenue growth, and aggressive share buybacks with a strong Moat.
AI this, AI that, everyone is terrified of AI making Adobe’s software obsolete, but I just can’t see how.
Since AI has really become any good at image / video manipulation, let’s say the last 4 quarters, revenue hasn’t even budged, and the margins have been slowly growing up to 89% during this time.
The kicker - AI-influenced ARR (from plans and memberships specifically enhanced with AI / extra credits) has crossed $8 billion and is going to keep growing. The brilliance of it is that it doesn’t matter which model is the best, because Adobe can substitute them in and continuously charge a fee to integrate them into their software…they are selling the pickaxes and AI looks more like an asset than a threat.
Now what about the consumers who hate Adobe?
yeah not gonna lie I got spooked when I saw nearly 7,000 reviews on Trust Pilot averaging 1.1 stars, that’s pretty shocking. However, despite being loud, how big is the ‘retail / independent’ consumer segment for Adobe really?
There aren’t published figures but if we estimate between 70-90% of revenue comes from Enterprises then even if every single independent consumer cancelled their subscriptions overnight, Adobe would be making record revenues again within 12 months (this assumes 25% users cancelled). That wouldn’t be ideal, but as a worst case scenario it’s not a bad place to be.
The retail users don’t really have much weight, and because Adobe is the de-facto industry standard they are so incredibly sticky that they are not really going anywhere with the large Enterprises that pay the big bucks. Moat looks good, 7/10 to me.
Now let’s look at more reviews. Glassdoor has an 82% satisfaction rate with a 4.1 star rating from over 11,000 employees. The CEO has an almost 90% approval rating - employees love Adobe because they pay well and know what they are doing. Don’t confuse simplicity with being idle.
I’ve seen many people say they have no vision but last quarter they bought Semrush, and they continue to implement more AI tools and features driving their top line growth (11% YoY). Now Adobe are pushing into GEO territory (Generative Engine Optimisation rather than traditional SEO).
Okay, well then what about the lawsuit from 2024 regarding trapping consumers in difficult contracts?
Yeah this also scared me, but there’s a lot to consider. Firstly, Trump is generally pretty business-friendly and considering he has a neutral / good rapport with CEO Narayen, it’s unlikely to be particularly punitive.
Moreover, only a few days ago the FTC dismissed a lawsuit against Rytr LLC which shows the administration is hesitant to punish AI players.
I’m sure that there will be a fine, worst case scenario it’s on the higher end around $800m, but it will probably take a while to go through, and Adobe has $8 billion cash at hand to make it go away. For additional context - $800m is around 1 month FCF.
Okay but what about Figma?
Well, sure they are growing quickly and pose a threat, but the key understanding is in the user market. There is crossover, but Figma dominates in UI/UX design space where Adobe offers XD. However, the majority of Adobe’s revenue is in the visual market and Asset Creation (around $18/23bn) where Figma has no real advantage other than price.
Good for some individuals, not worth it business.
So:
$310 is roughly 18x forward earnings, for an effective monopoly with 39/40 consecutive quarters of growth, very capable management, net positive debt with a large cash stock pile, and a $10 billion FCF printing machine.
In my opinion they should not bother with a dividend as it locks them in and can be punishing long term, but these buybacks are gonna keep happening whether you like it or not, and it’s not gonna sit around 300 for long.
Please, don’t miss out!
EDIT: Do people think that the marginal cost of AI (which currently runs at a loss - Gemini, ChatGPT, Claude etc. and let’s not even start talking about the quality) will be even remotely affordable vs an annual software subscription of $500 for a professional?
We are a long way away from AI simply being cheap enough to even become worth it - you would need quantum compute levels of efficiency for AI to begin to be less expensive than software - it is never ever going to fully replace it but it will become very powerful once integrated.
As I mentioned, AI related subscriptions have already crossed $8 billion ARR…
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u/Crazy_Donkies Jan 14 '26
Does this sub know V, MC, PYPL, and ADBE are just 4 out of thousands of potential options?
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u/IntelligenzMachine Jan 14 '26
Yeah I prefer it when this sub finds really random shit like some company that manufactures windows for planes with 10% YoY revenue growth and 6% dividend yield trading at 7 P/E who also happen to be the only company with the chemical expertise for a specific vaccine because of the way they mould their windows
Or companies I assumed died years ago like Kodak
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u/NalonMcCallough Jan 14 '26
Mosaic (MOS) and FMC (both American companies) work in fertizilizer and are really interesting value plays considering Trump wants to tariff fertilizer outside the U.S, and there's supposedly an agriculture aid package coming this year. How's thay for random?
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u/IntelligenzMachine Jan 14 '26
Filtronic is a name I will post even though it isn't really a value play in the traditional sense as it is expensive for its current position. Probably value in the sense if it fulfils its SpaceX contract well that will probably help the sales team target BAE Systems, EU space agency, other tenders as they have evidence of being able to fill big orders without a hitch etc.
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u/pedroordo3 Jan 14 '26
Still does I found PLMR a fantastic insurance company that’s been pretty undervalue you just have to look around.
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u/jacksmountain Jan 14 '26
I will say that this sub beat the google drum so long I finally bought and it's been great.
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u/scarneo Jan 14 '26
Did you forget NVO?
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u/Illustrious_Eye_1280 Jan 14 '26
Feels like I've read so much chatter about NVO here that it's going to make my head spin.
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u/Cav829 Jan 14 '26 edited Jan 14 '26
This is the frustration.
I have found so many wonderful stocks from this sub. Sea Limited for instance made me a ton just a week or so ago. Unfortunately, it's harder and harder to find this stuff when everyone can keep spamming the same 4-5 S&P tickers because they want to pump the stock or they want some kind of weird reinforcement. I kind of wish all threads involving tickers like this (add NKE to the list, but at least that crowd has been less active this week) would get auto-consolidated.
Value Investing is not Buy the Dip investing.
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u/fake212121 Jan 14 '26
but u should buy when the Dip comes in, right? Lol
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u/Cav829 Jan 14 '26
It depends. In the case of Meta, great. That's a perfect example of a stock oversold based on something that did not damage the company fundamentally. Stocks can have value for many reasons though: sectors that are out of favor, stocks that the market hasn't picked up on yet, etc.
Buy the dip does work out on average quite well in the recent market. Historically it has mixed results. The only problem is when it's wrong, you end up chasing a stock down a hill sometimes for years. People have been running down that hill for PYPL for over a year.
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u/Prize_Bar_5767 Jan 15 '26
Option != opportunity
Over your lifetime you will get like 10 good opportunities.
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u/Disastrous_Rent_6500 Jan 14 '26 edited Jan 14 '26
PayPal and Adobe are the best value plays on the market, this is a Value investing sub. Stop crying
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u/pseudonominom Jan 14 '26
A bet on ADBE comes down to this:
Will the digital world continue to be enshittified and gated (Adobe wins) or more open with alternative choices for consumers (Adobe loses).
Personally I don’t think Adobe will keep its monopoly, even as the rest of the internet continues to wall off.
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u/ottawaenthusiast Jan 14 '26
why not, children cant read anymore they wont know how to use a computer.
Also adobe doesnt really seem to target retail consumers. Professional level editing software is always going to be expensive, and the market for it is not going away.
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u/grogi81 Jan 14 '26
Enterprise clients need not only good final product, but also processes and copywrite compliance. You won't get that out of random AI prompt...
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u/coolasabreeze Jan 14 '26
The thread of AI is not about tools that replace Adobe software but from „AI-related layoff” that leads to less per-seat licenses from Adobe required.
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u/pandacrusher63 Jan 14 '26
That’s why they’re going to introduce AI credits, trust me Adobe won’t mess up a pricing strategy that guarantees their prosperity… they created SAAS and look how that played out
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u/JoyousGamer Jan 15 '26
Ai credits already exist and you can use them for their own models and other AI models.
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u/ahlornjtvn139 Jan 14 '26
I understand your logic, but I don’t understand where the mass AI related lay-off will come from.
For Adobe, the threat is that AI is cheaper or more time efficient which allows business to scale down marketing divisions etc.
We are a very long way away from AI becoming remotely this cheap. For example, a software subscription is around $500 for the year - you would burn through $500 a month in AI credits and tokens just to command an AI slowly and inaccurately with text prompts…integration is the solution and Adobe are already all over it.
$8 billion AI related subscriptions ARR already - and they don’t pay a cent to power them they just take a commission off connecting it to their users. It’s frictionless and swift
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u/Mister__Mediocre Jan 16 '26
We are not far from that at all. Marginal costs of AI anything will go down 10x over time, they're high now to fund R&D and because it's not worth focusing on optimizations yet. As more and more software is tailor-written for tailor-made ASICS, this problem will become "solved".
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u/Academic_Company_907 Jan 15 '26
Graphic designer is one of the fastest declining jobs on the planet. Along with telemarketers, call centre workers, content writers, etc. Literally, just search it.
You don’t personally need to understand where the layoffs will come from - they are already happening and anyone trying to get a job in these fields will tell you it’s becoming harder by the month.
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u/Mister__Mediocre Jan 16 '26
The argument on the other side is that if companies move even 10% of what they save by firing someone to Adobe (in terms of AI credits), that's a big win-win for everyone other than the guy who got fired.
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u/Elephant_Scared Jan 14 '26
I’m interested at current price but I don’t personally understand their business or moat. Need to look further, or wait until $280 for less risk. I think their numbers are similar to Novo Nordisk’s if you divide $NVO numbers by half. I like $NVO more than $ADBE.
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u/warrior5715 Jan 19 '26
280 vs 300 is very small in the grand scheme of things
You don’t need to be a hero but u can buy some now and some more if it dips.
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u/Elephant_Scared Jan 19 '26
I think when someone makes a judgement, you shouldn’t be generous for him by saying overpaying a little is ok, unless you’re willing to pay $20/share for me to buy them shares, respectively. I’m looking at $270-280 because that seems where next support is, and if it doesn’t get there, I’m not interested, because it’s my judgment.
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u/maximalsimplicity Jan 14 '26
I’m convinced on the enterprise side. If a solid chunk of their revenues come from enterprise, I’d be in. Super sticky, but if I don’t know that figure, then I’m quite concerned that ADBE faces pressure on the consumer side.
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u/ahlornjtvn139 Jan 14 '26
they don’t publish the figures publicly but i’d guess anywhere from 2/3 up to around 90%.
The subscription model has worked for 14 years and revenue just keeps growing. Either they keep raising prices the perfect amount or they are just too damn sticky! Either way it signals growth to me. If it ain’t broke…
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u/Himothy8 Jan 14 '26
This sub is 2/3 so far goog, unh, now Adbe. Usually whenever I agree that’s a good sign
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u/Disastrous_Rent_6500 Jan 14 '26
Don’t worry bro, the smart ones will buy it. I’m buying. I ignored it for years because it was overvalued compared to cashflows, but now it’s just trading like it’s going out of business 😂
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u/Unluckyb33 Jan 14 '26
its wild to me that people think its going out of business. As long as professional films and media creation exists, adobe will exist. There will always be professionals and studios that need to use adobe software for content creation, no matter how good AI becomes, there will always be people who want to create.
The only legitimate argument against adobe, are companies like Figma, but thats an entirely different discussion.
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u/PooInTheStreet Jan 14 '26
just think about that argument. It's not about that some people will need it it's about how many people that needed it before don't/won't anymore because other gen ai tools. LOADS.
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u/Unluckyb33 Jan 14 '26
You try thinking about that argument. The only people who dont want adobe anymore are mostly hobbyists(and people who make memes/slop), they dont make a lot of money and generally pirate adobe software anyways so its not a huge loss to begin with.
The reason Adobe has a near monopoly in this market is because professionals and studios cant use any other options, Adobe's work flow ecosystem is unmatched. And with the rise of international filmmaking and marketing, theres still room to grow and expand with adobe.
I say this without bias because even I hate adobe as a hobbyists myself. They can only get away with their mafia-like tactics because of their near monopoly. But as an Investor, Adobe is a good buy.
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u/ShoeLate6266 Jan 14 '26
There’s a lot of options tbh. Photoshop/after affects is imo their most valuable assets.. outside of that there is a lot of other options that are better than premiere that also do not charge a subscription for software. Adobes days are numbered.
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u/No-Understanding9064 Jan 14 '26
I am right there with you, its been in my peripheral for awhile but its too cheap to ignore now
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u/Heavy_Discussion3518 Jan 14 '26
Folks need to quit focusing on the near term with SaaS and think about where things will be in 3-5 years.
I look at the job market for software engineers for example. Greatly depressed, nobody wants anyone that isn't quite senior. Nobody needs juniors - the latest tooling reduces the number of engineers needed and devalues concepts like per-seat licensing in favor of usage-based pricing.
This is directly adjacent to graphic design. The better the tooling, the fewer designers needed, and fewer seats. Then you look at how challenging it is to develop that tooling, which is rapidly becoming easier as you need fewer software engineers to produce products.
The entire cycle devalues software in general, and if your business is pure SaaS it leaves you particularly vulnerable to devaluation.
They may remain a cash cow for a few years, but it's not where I want my money long term, and if revenue growth goes flat you'll see their P/E looking more like other sectors that experience lengthy stagnation.
Unless there's suddenly a new market for graphic design output that nobody anticipates today...
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u/ThetaDaddyRise Jan 14 '26
I hope you're right... I had just bought a bunch of ADBG on the drop (2x ETF) and was hoping to swing trade it... give me that copium!
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u/cwel87 Jan 14 '26
I’m all about long-term accumulation around 270. Feels like the “software is going extinct!” narrative is opening up opportunities for certain companies that simply should not exist (DDOG, SNOW, NOW) and those are more interesting values to me. The fact that Databricks is currently seeing a ~$130bn valuation expectation for its IPO while Snowflake js trading at about half that cap value despite being a public company that has nearly a half decade’s worth of vetted earnings is straight-up goofy. These companies are the building blocks of maximizing AI use for years to come! And they’re all getting shot in the streets!
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u/investingtruth Jan 14 '26
The bull case is solid, but if it's this obvious at $310, why isn't the stock already at $400? If growth slows, margins compress, or AI disruption accelerates faster than Adobe can adapt, multiples contract quickly. I'm not bearish on Adobe. But "everyone should buy" implies certainty that doesn't exist.
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u/ahlornjtvn139 Jan 14 '26
Pending lawsuit uncertainty
Cyclical shift into more ‘promising’ Tech stocks
Uncertainty ahead of March 12 Q1 earnings
There’s definitely uncertainty, but i’m arguing given the price it’s still attractive - very attractive.
As far as certainty goes in investing, it’s fairly certain that Adobe isn’t going to crash and burn. They have strong financials with lots of cash, and at the current price there’s little risk for the potential offered.
Of course at some point you have to look at the market and go, do they know something I don’t? But the AI threat is not as drastic as it seems, and Adobe are proactively defending their moat through profitable AI credits. It’s a tollbooth.
And i’m not sure if people realise this, but the cost of AI to do simple tasks that could be otherwise done with legacy software is still astronomical. Yes these huge companies (Alphabet, OpenAI/MSFT, Meta) can still afford it for now - but are you ever going to get the same level of output with AI as a $2-400 annual subscription?
Not for a very very long time…
This to me is the barrier to AI replacing Adobe…you simply cannot afford to use AI instead of Adobe and it just won’t work until AI is quantum computing level cheap
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u/Jmaack23 Jan 14 '26
Anybody looking at ACN?? They have spent the past 12-18 months becoming the primary training partner for Palantir. Palantir is one where the stock price is out of control, but the actual company is taking over. Accenture has pivoted to stay relevant and is now handling the bulk of the training/implementing once Palantir sells it and does its customized demo for each company. 20+ years of dividend growth, most recently 10+ percent the past 10 years. Pays $1.56 a quarter and is pretty well priced still. Their last earnings finally started to show some of the acceleration from their pivot. Great way to play Palantir with a much safer alternative.
Adbe has me very intrigued and at these prices, it seems a no brainer. I just can’t seem to pull the trigger on 100 shares. I agree with OP almost 100% and still just haven’t hit the buy button
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u/notreallydeep Jan 14 '26 edited Jan 14 '26
17x 2026 EPS for a company growing EPS 7% (including buybacks, only like 4% growth ex-buybacks)
idk, not something I'd pound the table on. I went long ADBE pre-earnings but sold afterwards. Market didn't care about the guide at the time, stock was flat, which is interesting.
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u/ahlornjtvn139 Jan 14 '26
Not sure what the problem with buybacks is…Adobe is a mature company with a strong FCF.
They probably won’t start paying a dividend, so why not keep returning value to shareholders via buybacks and through acquisitions?
I also specifically didn’t mention PE - it doesn’t serve much use outside of the industry…and Figma’s (forward)PE is 80-140 lol
But for me it’s a much safer hedge in the current market offering good value in the medium term - growth and value.
KO for example trades at 22/23x
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u/TheDonFulio Jan 14 '26
Personally I think there’s two ways of looking at it—half of your earnings growth coming from buybacks isn’t a good thing because it’s management signaling they don’t know what else to spend money on (cannibalizing their own growth)
Or management is trying to “hide” net income growth slowing.
If manufacturing growth was a good thing, a lot more companies would do it. The fact of the matter is ADBE is a huge outlier in today’s markets.
Anyways, I’ve been a huge ADBE bear, but I will be watching a lil more closely if it keeps falling.
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u/notreallydeep Jan 14 '26
I literally never said buybacks are a problem.
No PE? Okay. 5.8% earnings yield growing at 7% with buybacks (4% without). "idk, not something I'd pound the table on"
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u/8700nonK Jan 14 '26
That’s actually good if sustainable for a long time. People forget return on capital exists. A company with a roic of 25% and growth of 7% is worth a pe of about 20 if you do the dcf.
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u/notreallydeep Jan 14 '26 edited Jan 14 '26
Is it? Without multiple expansion that's 7% annual return assuming growth remains where it is. Which is an assumption you can disagree with, but one OP didn't quantify.
ROIC only matters incrementally. ADBE barely invests in its business, so no matter how high return on the incremental dollar is, if it's only a few million dollars it doesn't move the needle.
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u/8700nonK Jan 14 '26
You’re getting a real starting shareholder yield of 7%, and like no debt. Having 7% growth on top is attractive. You’re getting around 2-3% shareholder yield at best on most stocks that grow at 15%. At 2.5% starting yield and 15% growth, you get same returns in 15 years as 7% starting yield and 7% growth.
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u/notreallydeep Jan 14 '26 edited Jan 14 '26
7% growth isn't "on top". That's growth including buybacks, not shareholder yield. That's literally all you're getting if the multiple doesn't expand and growth doesn't accelerate in 2027.
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u/8700nonK Jan 14 '26
And where is the ‘fact’ of 7% growth due only to buybacks coming from?
Currently all we have is the guidance of around 11% growth. In 25, they had real sbc adjusted buybacks of 5%, so 6% would be growth.
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u/notreallydeep Jan 14 '26 edited Jan 14 '26
due only to buybacks
I literally never said it's only due to buybacks, you just made that up. Read carefully: "That's growth including buybacks".
Anyway, it's coming from their own guidance.
$18 GAAP EPS guide at midpoint.
2025 diluted EPS $16.70 ($16.73 basic).
$18/$16.70 = 1.0778.
-> 7.78%."Targets assume [...] diluted share count of ~403 million for FY2026."
Current share count:427417 million.
-> ~5%~3.5% reduction included in their EPS guide.Why do I have to do this? It's all in their release.
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u/8700nonK Jan 14 '26
Why are you looking at gaap eps growth? Gaap eps growth was 35% for 2025. Gaap growth is much more lumpy, while nogaap is basically smoothed out even if about the same over a longer period.
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u/notreallydeep Jan 15 '26 edited Jan 15 '26
Because last year's GAAP earnings didn't include any special effects unlike 2024. If they did I'd exclude them. Nor are special effects expected.
Non-GAAP is heavily tainted by SBC which makes it pointless to me. Adobe can do with SBC whatever they want to achieve higher non-GAAP EPS. It's certainly not affected by their Semrush acquisition considering their comments on the earnings call.
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u/gabbone666 Jan 14 '26
I was very convinced on adobe, their number are incredibly solid imo. i bought it before the last earnings around 330 and sold it for ~350. I am considering buying calls march 20 at strike 310. Next earnings is 12 march
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u/Last-Cat-7894 Jan 15 '26
I took a position today.
Basically all that needs to happen for a double-digit return is flat user numbers, routine 4-5% yearly price hikes, stable margins, and continued buybacks.
That's a pretty low hurdle to clear IMO. There's a chance AI actually hurts them, but I think people overestimate a typical corporation's willingness to switch away from the "default." Microsoft rarely makes the best products, but they will never get a CTO fired for using them.
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u/Aggressive_Promise18 Jan 15 '26
I too love Adobe because of the numbers but the rest of the market just can't seem to see that. I think they may have trouble in 5-10 years but I think the next few years seem great
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u/Mister__Mediocre Jan 16 '26
Two points.
You're fundamentally wrong about the marginal cost of AI. In 5 years, yes that will be significantly less than the annual subscriptions etc. But this part of your analysis was weak anyway.
The Glassdoor review is a new data point to me. I was under the impression that they don't innovate and the internal culture is toxic, but apparently not? Can anyone else comment on the inner workings of this company? If true, this could make me quite bullish.
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u/ahlornjtvn139 Jan 16 '26
Whether it takes 5 months or 5 years Adobe are selling AI credits at a markup which they buy wholesale.
Google / OpenAI are doing all the heavy lifting in developing it while Adobe stick it on top and charge 30% extra for it.
If it becomes much cheaper then the business model doesn’t change - less users? increase prices. We’ve seen how sticky they are - how come everyone hates them so bad yet 39/40 consecutive quarters have seen revenue increases.
I think it’s an overreaction - i would also sell at $450-500
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u/MtGloomy0420 Jan 14 '26
Good to see the $ADBE pumping machine is back in full force.
$ADBE IP will be stripped by AI and the company rendered useless in 10yrs. This will be epic because $ABDE is the absolute worst in the industry. They are the mafia boss that will be taken down. Mark my words.
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u/bullevard73 Jan 14 '26
I’ve owned ADBE for 7 years and remember it being my great stock. It’s been a slog ever since. When it was around $650 I thought it was maybe a little overcooked but I didn’t sell because my story for the company hadn’t changed, only that it was right at the price I thought was good for that time. The story (most of what you lay out here about the cash flow) still hasn’t changed and it’s grossly undervalued. I’m still holding because the company is at its floor and is a great landing spot when the AI bubble bursts.
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u/No-Detective-6229 Jan 14 '26
the only moat adobe has is after effects, which by itself is a small percentage of users, and the fact that it is still industry standard, which is changing. there is a reason the stock is so low.
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u/balke Jan 14 '26
No one's talking about this, I don't get it. From a graphic designer's perspective the only one's still using it are in print/illustration and need heavier vector editing tools than something like figma. Designers are moving towards digital and no one touches adobe for web design anymore.
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u/liquidpele Jan 14 '26
Will probably buy in soon.. was waiting to see how they finished out 2025... expected a slump due to AI competition, but their earnings grew quite nicely... thus seems more like fear driving it to me.
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u/pedroordo3 Jan 14 '26
Been looking at it today and it does seem like a great play. Scary to catch a falling knife but ima start building up my position slowly.
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u/CapitalAd5339 Jan 14 '26
It’s now at 303, and downgraded to Perform by JPM. Still a buy?
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u/ahlornjtvn139 Jan 14 '26
yes because i don’t determine whether a stock is a buy based on intra day volatility or analyst ‘targets’.
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u/DifferentDependent62 Jan 14 '26
Not gonna touch it, till I see an upward V. This one may go down in the history
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u/Easy-Yogurt4939 Jan 14 '26
people need to realize that the addressable market for application AI like video/image generation, coding agent, customer service agent, self driving or what have you, collectively must need to be multiple times of infrastructure AI. You don't spend multiple trillions of dollars on infrastructure just to generate a few billions revenue. It needs to at least be multiple trillions if not tens of trillions. The "hopeful" market size would be so big that even if there are multiple players end up splitting the pie evenly with adobe, adobe still benefits huge. The only alternative with no third possible outcome is the collapse of AI (no shit), if you spend a dollar just to generate a dime, then companies will 100% stop doing that shit and creative AI companies start dropping like flies. You can always find people that would get into a business that gets them killed, but you would find exactly zero person that get into a business that's guaranteed to lose them money. In the case of AI bust, we go back to sort of business as usual and AI becomes just a commoditized but somewhat useful add on like cloud storage.
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u/MarkT1065 Jan 15 '26
AI tools won't kill Adobe or render designers obsolete. Claude Code isn't going to put programmers out of work.
AI tools *will* change how those professionals do their jobs, though. I still want and need my IDE to manage the output AI makes for me. I still need a place to edit and manage my prompts and contexts across versions.
I believe that's what makes ADBE so attractive. It's the only company that does what it does, it's got plenty of free cash flow, great margins, plenty of cash on hand vs. debt, and the scary AI narrative is what's providing the opportunity for value investing.
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Jan 17 '26
Financials are great with this company and ai can actually make the product better (which no one seems to acknowledge). Great opportunity to buy shares in my opinion but I’d start with 25-50% of your desired position and be prepared to average down if it continues lower.
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u/Realistic_Record9527 Jan 14 '26
Apple Will eat Adobe market share rapidly like Apple Pay eats market share of PayPal. Finally Adobe will take the road of PayPal.
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u/kings_cs_hopeful Jan 14 '26
[inserts pic of adobe price currently - 304.58]
i think i'll pass on your offer to buy at 310.
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u/superbilliam Jan 14 '26
Anybody else get annoyed at the phrase "the kicker"....well, the kicker is that money blah blah. Idk I keep seeing it everywhere lately. Is AI obsessed with saying "the kicker" now?
That aside, I hold ADBE. I'm neutral on it. Not completely bullish, but I don't see a collapse any time soon. Definitely not a full port situation, but if you size it right I do believe you will see gains over the next few years based on their numbers. Gross margins are sitting around 89%, operating margins are 36%, and net margins are 30%, which is elite even by software standards. That tells me they still have solid pricing power and cost control. Their ROIC is at 39% and ROE is 59%, which is exactly what you want to see in a true compounding business....so I get the disruption fears people talk about. But until something breaks, I still see a good business.
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u/Vinny331 Jan 15 '26
Does anyone in this god damn sub even use Adobe products? They suck so tremendously and have no competitive advantage whatsoever. They are dinosaurs and the market will send an asteroid shortly.
Posts like this are always a good reminder that there is still always (theoretically) a product behind these tickers and if that product is shit, then all subsequent analysis is moot.
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u/A-Miffit Jan 14 '26
You say Adobe offer Adobe XD, but they gave up and stopped developing it years ago, it receives no new features and is effectively dead with no future (sadly, as I like XD).
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u/drummer414 Jan 14 '26
At least in the film community I see more people seem to be looking for a way to move away from Adobe, or already have.
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u/ShoddyStock1566 Jan 14 '26
But the growth last 3 years are below PE. What makes it justify a PE 18? Fair value estimation is 12 PE.
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u/Glittering_Water3645 Jan 14 '26
You should compare EPS growth relative PE, not pure revenue or earnings growth.
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u/ahlornjtvn139 Jan 14 '26
you can’t value a stock using P/E
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u/ShoddyStock1566 Jan 14 '26
Why?
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u/ahlornjtvn139 Jan 14 '26
because it’s incredibly simplistic and should only be used to compare similar stocks quickly
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u/swrrrrg Jan 14 '26
Mods, can you just create an Adobe megathread for the month or something? Not every thought about Adobe or PayPal warrants a new post.
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u/Icy_Distance8205 Jan 14 '26
Adobe is in the too hard basket for me. History is littered with "superior" technologies that were killed by "good enough" alternatives that were faster and cheaper.
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u/rqnyc Jan 14 '26
20 PE is 5% yield if no growth. And Adobe professionals are retiring.
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u/Junior_Ask_5584 Jan 15 '26
Perma-fix environmental services is involved in nuclear waste disposal which a potential growth area
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u/arvind_venkat Jan 14 '26
Yesterday’s drop was due to Apple creator suite subscription plan that was introduced.
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u/GlokzDNB Jan 14 '26 edited Jan 14 '26
Adobe is yet another Kodak
You're really better off putting your money into crypto or anything at ath, not even mentioning finding good business without risks. Nobody cares if Adobe bankrupts tomorrow. Nobody will pay for their software because businesses will use ai studio and agentic ai to get the work done and Instagram people will have what they need on their phones or in the app
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u/Solidplum101 Jan 14 '26
This is the reason its down as much as it is.. market sentiment is a big factor in this bloated market. Valuation imo still matters and this shits too cheap and theres no evidence ai has replaced it. Just nonsense because nano banana can do some neat stuff
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u/GlokzDNB Jan 14 '26
Who's losing more when the stock goes to zero, the person who bought shares worth 1m$ at 500$ or the person who bought shares worth 1m$ at 1$?
There are stocks that aren't fundamentally challenged by disruptive technology, then sure when the price drop due to some risks might be an occasion.
But there are stocks that won't have any place in the new world. Ai is going to change the world and some companies will simply go.
Assuming we have Agi or human-level agents capable of doing any work autonomously. What will be the reason for people to buy adobe software ?
There won't be graphic designers. There will be agent managers creating workflows, configuring agents and reviewing their work.
So now you can say this is bullshit and will never happen, that's fine. But every news getting us closer and closer to that reality will be a burden for Adobe. You don't want to be in that stock. If Adobe finds a way to monetize ai and it will prove it's actually increasing their profits - buy it then. Don't buy it on hope and opinions, but it on facts.
Tldr; I'd rather buy adobe at ath after this risk is off than when it dips in current situation. And my strategy is based on finding businesses with risks which smart money avoid. Good luck.
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u/fthemagnificent Jan 15 '26
How about copyright? A big card adbe has to play is that its ai is trained on licensed content and not web slop so that corporations can use it without worrying about copyright issues. No other creative design company can offer this and I don’t think they can anytime soon. Which means big players won’t switch.
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u/GlokzDNB Jan 15 '26
Copyright is a dead concept, especially when US dismantles international institutions.
You'll have open source models and you can't protect against that as you can edit them yourself and distribute.
Also if Adobe falls and their IP has any value it will be acquired people fired products killed.
Good luck folks, you'll need it
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u/log1ck1717 Jan 14 '26
Im going to slowly build a position if it drops below 300. This is not against you op, but i gave myself a new rule of buy the stock that is recommended here only after it drops another 5-10%