The sell-off felt like a classic case of 'shoot first, ask questions later.' Wall Street saw the reporting methodology changes and assumed management was trying to hide a slowdown or seat compression from AI.
But the numbers didn't back that fear. The deceleration didn't materialize. To me, this looks like a mispricing driven by uncertainty. The market is slowly realizing there’s no 'smoking gun' in the financials, and I think that 14x forward multiple is going to get bid up as the fear fades.
That's a possibility! I just wouldn't bet on it personally as we just don't have confirmations of demand acceleration for AI products! But Adobe remains an excellent company so many will want to own shares and I understand that
They don't need more demand to justify a higher multiple; they need to prove they are not in a structural decline. 14x forward is pretty reasonable. But you are right it's not going to double from here. For that they need demand acceleration. Are there any stocks that fit your criteria right now?
I think these are fundamentally different situations.
In one case, upside requires the business to create new demand through product delivery and real sales that’s a multi-year execution question.
In the other, the upside comes from sentiment being too pessimistic; the company doesn’t need to reinvent itself. The investors need to wake to the reality that it is not dying.
We agree that they need demand for their AI products either way to deserve a premium, right?
Then, I think the difference between us is that you believe the multiples are already depressed while I believe the market prices in stable growth from here. To me, without clear AI demand trend, Adobe trades at fair multiples already
That's assuming the monopoly holds. So we come back to the start of our discussion imo. That remains true if there is an acceleration on AI services as either way companies will migrate to AI. The question is will that be offered by Adobe or not.
Great framing on the quality vs price dynamic. The FY26 revnue guide decelerating to 9.4% while RPO grows 13% is basically management telegraphing they expect weaker near-term monetizaton even as commitments build. That lag could mean enterprise AI deals are closing but ramping slowly, or worse, the AI features just don't command pricing power yet. Either way,until ARR inflects positively the multiple stays compressed.
The sell-off felt like a classic case of 'shoot first, ask questions later.' Wall Street saw the reporting methodology changes and assumed management was trying to hide a slowdown or seat compression from AI.
But the numbers didn't back that fear. The deceleration didn't materialize. To me, this looks like a mispricing driven by uncertainty. The market is slowly realizing there’s no 'smoking gun' in the financials, and I think that 14x forward multiple is going to get bid up as the fear fades.
Fair enough, appreciate the discussion.
That's a possibility! I just wouldn't bet on it personally as we just don't have confirmations of demand acceleration for AI products! But Adobe remains an excellent company so many will want to own shares and I understand that
They don't need more demand to justify a higher multiple; they need to prove they are not in a structural decline. 14x forward is pretty reasonable. But you are right it's not going to double from here. For that they need demand acceleration. Are there any stocks that fit your criteria right now?
I mean, proving they aren't in a structural decline is the same than proving a growing demand for their AI services.
Yes, I have a write up going over each of my position and watchlist. At the moment, asterlabs transmedics Alibaba Nebius mainly.
I think these are fundamentally different situations.
In one case, upside requires the business to create new demand through product delivery and real sales that’s a multi-year execution question.
In the other, the upside comes from sentiment being too pessimistic; the company doesn’t need to reinvent itself. The investors need to wake to the reality that it is not dying.
We agree that they need demand for their AI products either way to deserve a premium, right?
Then, I think the difference between us is that you believe the multiples are already depressed while I believe the market prices in stable growth from here. To me, without clear AI demand trend, Adobe trades at fair multiples already
At ~15× forward and ~10% growth, Adobe is trading at roughly a 1.5 PEG.
For a monopoly-like software business with ~89% gross margins and ~40% EBITDA margins, that doesn’t strike me as “fair value”
That's assuming the monopoly holds. So we come back to the start of our discussion imo. That remains true if there is an acceleration on AI services as either way companies will migrate to AI. The question is will that be offered by Adobe or not.
I understand we disagree on that aspect then.
Great framing on the quality vs price dynamic. The FY26 revnue guide decelerating to 9.4% while RPO grows 13% is basically management telegraphing they expect weaker near-term monetizaton even as commitments build. That lag could mean enterprise AI deals are closing but ramping slowly, or worse, the AI features just don't command pricing power yet. Either way,until ARR inflects positively the multiple stays compressed.
🤝