$Adobe(ADBE)$ $Adobe(ADBE)$ coming back strong. What's going on?
I think Adobe (NASDAQ: ADBE) is becoming a buy again, but I would not chase it aggressively at US$293.
Buy, but preferably on weakness
Adobe has had a remarkable rebound: it was around $190–205 earlier this year and is now around $293. That means some of the easy recovery has already happened.
The interesting part is that the business fundamentals are considerably better than the stock’s recent reputation suggests:
* Q2 FY2026 revenue reached a record $6.62B, up roughly 13%.
* Adobe raised FY2026 revenue guidance to $26.5–26.6B.
* AI-first ARR exceeded $500M, reportedly tripling YoY.
* Creative and Marketing subscription revenue continues to grow.
* Valuation is only around 16.8× trailing earnings, which is unusually low for a company with Adobe’s margins, recurring revenue and cash generation.
The big issue: AI
This is the reason the market punished Adobe.
The fear is that generative AI makes Photoshop, Illustrator, Premiere and other Adobe products less valuable — or allows competitors such as Canva and AI-native tools to take market share.
But I’m increasingly leaning toward the bull case: Adobe is incorporating AI inside its existing ecosystem rather than being displaced by it. AI-first ARR above $500M is an encouraging early indication.
The next major test is Q3 earnings on September 10. watch the space!
At ~$293, I’d probably initiate 25–30% of the position, rather than going all-in before earnings.
If earnings disappoint, I would actually welcome $250–270 as an accumulation opportunity, assuming the underlying revenue/ARR outlook remains intact.
2–3 year potential
My rough scenario:
* Bear: $200–240 — AI competition materially damages growth.
* Base: $350–420 — Adobe maintains its moat, AI becomes incremental revenue, earnings compound.
* Bull: $450–550+ — AI becomes a major new monetisation layer across Creative Cloud and Acrobat.
So from ~$293, I see reasonable 20–40% upside in the base case, with considerably more if Adobe successfully monetises AI.
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- BingGibbon·09-01 17:13Canva pressure is real, but Adobe's lock-in is deeper in enterprise workflows and file formats. That moat is harder to kill than any flashy AI featureLikeReport
- glimzy·09-01 17:1316.8x is not cheap-low, it is market still ignoring Adobe's AI monetization path. The cash flow and moat look stronger than the multiple implies 👀LikeReport