AI Narrative Is Wrong – Adobe’s Still Crushing It
I just opened a new position in Adobe. The market has been telling itself this story that AI will “kill” Adobe, that tools like Canva or Figma will eat its lunch. That’s just not true. The numbers are impeccable: free cash flow margins around 40%, revenue still growing double-digits, and they keep crushing earnings. Last quarter was another beat, and they even raised guidance. There’s zero evidence of AI eating into their market share.
In fact, Adobe is leaning into AI. Firefly, Acrobat AI, and other tools are already bringing in billions in ARR. Enterprise adoption is huge – roughly 90% of their top 50 customers are using AI features, and nearly half have doubled their spend since early 2023. This is not a company being disrupted. It’s a company using disruption to its advantage.
Meanwhile, the stock trades at a forward P/E below 20. Think about that: one of the highest-quality software companies in the world, with unmatched scale and brand power, priced like a dying business. It reminds me a lot of Google before its re-rating – great fundamentals, ignored because investors were chasing shinier AI names.
Yes, you need to watch Adobe closely. In software, market position is everything, and if they ever start losing ground, the story changes fast. However, they are not, and markets refuse to accept it. In 9 out of 10 scenarios, Adobe is on top of it. Great business don’t just disappear. Google didn’t, Meta didn’t and Adobe won’t either. They keep buying back shares aggressively, beating quarter after quarter, and have one of the stickiest customer bases in the industry.
Personally, I think this stock is poised for a rebound. And honestly? Investors just don’t want to open their eyes. This is one of the opportunities, where this Buffett quote fits perfectly: “Be greedy when others are fearful.”
