Adobe's 8x P/E signals that its outlook numbers are unreliable, its capital allocation is poor and it is likely a casualty of AI. It spent all its free cash flow buying back shares at $400 and is on a direct collision course with AI; no one can say its products will be as crucial as in the last two decades. Unlike Meta in 2022, whose ads business was never impaired, there are too many unknowns. It could work or stagnate for years, so it sits in the too-hard bucket even if multiples scream buy. … Show more

Adobe fails a 20% annual hurdle rate, so it is a pass despite being fine. At 10% growth on a 12-16x multiple, projected returns are only 9-17% a year, and every dollar in a merely fine idea is a dollar unavailable for the best opportunities. Opportunity cost, inflation and the risk-free rate all set the bar each holding must clear. x.com 

Adobe is a bit undervalued, though not significantly, at 13x earnings with 13% revenue growth. Its falling profit margin is concerning, and AI threats are growing as image generation improves. x.com 

Adobe's problem is no longer valuation but bad sentiment toward software companies. It fell after hours in sympathy with ServiceNow despite trading around 15x trailing and 10x forward earnings while still growing 10%, and none of that matters right now. To recover, Adobe needs more collaborative projects and joint events with leading AI companies so it is seen as definitively part of the future. x.com 

Adobe looks cheap only if stock-based compensation is ignored: its 7x 2026 P/E becomes 11x including SBC, as Intuit goes from 9x to 14x and Salesforce from 10x to 19x. Blindly ignoring those real economic costs to shareholders is partly why software was in a bubble. x.com 

Adobe's cash generation and growing AI subscriptions give its tentative turnaround fundamental support. It has $10.59B in free cash flow; revenue and EPS are expected to grow at double-digit rates through 2028, while AI-first ARR is up 150% year over year and Firefly ARR 40% quarter over quarter. Its Stage 1 base is attempting to break a long downtrend. x.com 

Adobe is not re-accelerating: management guides growth down to 9-10% with operating margins falling, and more pressure lies ahead. That makes buying every dip at about 16x earnings a mistake, even as @qualtrim points to 12% revenue growth and a 47.4% operating margin. x.com  x.com 

Adobe remains the best example of what not to buy because AI has had minimal impact and its backlog is slowing rapidly. Management chose user acquisition over monetization, as Duolingo did, leaving open whether users stay when prices rise; for now, waiting to monetize looks the same as being unable to. Free or cheaper tools that match its specialist subscriptions could cut usage, RPO and cash generation. When acceleration and margin expansion are everywhere, owning neither makes little sense. … Show more

Adobe trades at 10x forward earnings despite a massive creative-software moat, as the market writes it off as a dead legacy app because of AI tools. It has trained its AI on billions of proprietary assets, embedded Firefly in 75% of the Fortune 500 and reached $26 billion of recurring revenue, even after regulators killed its $20 billion Figma deal and its CEO stepped down. The next decade could be challenging for growth, though nothing shows signs of that yet. x.com  x.com 

Adobe could easily go the way of PayPal, its best analog: a mature consumer-facing large-cap tech company that attempted a poorly received large acquisition as growth stalled, then changed executives. Growth is likely to decelerate further amid pricing pressure, buybacks won't matter much in the short term, and more talent will leave once a CEO is picked. The stock is only optically cheap. x.com  x.com