Adobe Systems (ADBE)

Views it the same way as Intel. He feels the investor's pain, but finally got out of the way. Slow on execution with AI, and hopes this will change. Firefly had pretty good fanfare and brought many software components together. Doesn't think AI will eat their lunch because AI is more about single solutions than multiple solutions. Lots of brand loyalty. 

Will still be around in 3 years, but 10 years could be a different story.

It has surprised earnings for many, many quarters in a row, and have been buying back shares. It isn't news that AI is troubling this stock, but so far it hasn't shown up in the results. The AI impact is overly priced in, seen whenever they report each quarter some outperformance. That said, he's giving this one more earnings season.

Value's deteriorated because of low-cost competition. Product prices are too high. Many investors don't think it can monetize on its AI capabilities. Getting into cloud, but can't compete with MSFT, AMZN or GOOG. Figma (a takeover target it failed to acquire, but which had a wildly successful IPO yesterday) can do exactly the same thing at a fraction of the cost. Don't catch a falling knife.

Not as though they make buggy whips. Lots of different products in everyday activities, such as the PDF option if ChatGPT fails to work. This presence is likely to continue. 

If you own it and it's been painful, you could try the 1x2 call spread discussed earlier in today's show. Or you could look to generate some call premiums by selling some upside calls. On a stock that's been beaten up like this, the option prices are typically high. So if you want to start extracting some premium from that, there's definitely an opportunity to do that.

A tough call. Many have switched from Adobe to the cheaper Figma. Let the Figma deal come and see what happens; you could get Adobe cheaper.

Still stands out, but the fear is that it won't in the world of AI. And that's why it looks particularly interesting. Good earnings, upped guidance, yet stock fell. Valuation has collapsed to 17x PE. Still likely to grow double-digit EPS this year, and consensus is still 14-15% EPS growth over the next 3 years. 

There is more competition, but it's spending 18% of sales on R&D, so something compelling will turn up. No dividend.

Now cheap at $380. This reminds him of IBM or Oracle who hadn't grabbed the current trend, but Adobe has just released Firefly. He sees more upside than downside.

Is at risk of single-digit revenue growth in 2025, and the last time that happened was 2014. He sold. 

She got sick of holding this, because they have trouble with Photoshop--now people can use the tools found in PS elsewhere. She sold before the quarter. Also with Meta, clients can create their own ads using Meta's tools. Adobe hasn't moved fast enough to develop such tools.

He bought more. They beat top and bottom lines, and raised guidance. He's a value investor. Sure, the share price has been terrible, but their earnings estimates are starting to rise and they're buying back share to reduce the share count 5% in the past year. They are meeting the competitive threat through their beats and guidance. They outperform consistently. Eventually, the share price will rise.

Shares are down today after reporting. The street is challenging their ability to monetize AI. They continue to deliver every time they report, but the stock does not perform well. But he will continue to be patient, because this is a stock to own.

It reports Thursday. It could break its downtrend. He wishes the competition wasn't so fierce, and it's not letting up. An amazing company helping small companies. Is worth buying at 20x earnings. A good report, and this flies.

Still growing topline and bottom line at double digits. Spewing lots of free cash, buying back stock, great balance sheet. Worry is about how will AI affect its business? No evidence yet that it's impacting any of the company's results. Market's not respecting the fundamentals at the moment, maybe rightly so.

Thought it was well positioned to monetize AI and deliver to end user. Didn't execute to the extent that analysts thought it would. Increased competition in the space. Struggling to maintain market share. Still owns, disappointing.

She just sold it. It's been undervalued and dominates its space. But trends are slowing and she doesn't know how long the company will prove itself in this space in regards to AI.