Adobe Systems (ADBE)

It's a show-me story: need to see them monetize AI. They have tremendous power to get in front of everyone, though, because everyone uses them.

Their December results beat, but they lowered 2025 guidance by 1.5%. Shares fell 20%, an overreaction. Investors are worried about Adobe's pace of AI progress, but things should improve this year as they create more optimal pricing, including affordable rates for poorer customers. Their express product will compete with Canva. Meanwhile, they're targeting the enterprise market with GenStudio, an AI factory for advertisers. Note: the CEO of Eli Lilly recently bought $1 million of Adobe shares, as he sits on the board.

AI is going to revolutionize the ability to deliver its products in a more dynamic and easier way. But is the company moat going to be as wide? Will we be able to use almost any product to give us what we thought was so special about ADBE? Not top of mind for him right now.

Is worried, but the CEO and product are so good. It generates a lot of cash. Though tough to own at these levels, you can't sell this at 20x PE.

Disappointed earnings overall. He stood aside. Because of the volatility, you can make some pretty good money selling puts and calls on short-dated options.

Likes it. Bit of a Rodney Dangerfield "no respect" complex. Concern that others will eat its AI lunch. Bit pricey at 18.5x for 11.4% EPS growth. Need to own a name like this in the tech space when price reaches these levels. Beat on Q3, guidance for Q4 a bit shy. Earnings are coming up pretty soon. Firefly generative AI showing momentum. 

He'd face the fear and buy at these levels.

Shares have fallen so far that you can but it now. Yes, he may be criticized for saying that now.

It could be a winner or loser. They have an installed user baser, but over 5 years you can't project their cash flow. Their moat is less deep than before It's too complicated to understand.

Sold in late August. Exuberance in AI quickly turned to disappointment in investors' minds. He may not have agreed with that, but you have to face reality, so he made a quick exit. Still a good company, but risks with core business. He'd look elsewhere for new money.

There's something about their management. It has a stable of great products for content creation et al, but they disappoint during earnings; it's how they frame earnings. Their earnings are actually not bad, but they are so conservative that they lower their forecasts. On Dec. 13, they barely beat the top line and were in line the bottom line, but lowered guidance again. Look at Service Now, instead, in SAAS.

Down 25% this year. He continues to be patient and will hold. The disruption story to Adobe's core is overdone. It has incredible profitability, trading at a 30% discount to its 10-year average. They will figure out how to do AI.

AI darling. Q3 beat on top and bottom. But it's all about the guidance, and Q4 guidance was a bit shy. Trades at 21x the 2026 earnings, with 13% growth. Still pricey. An infectious product that's going to be more widely used going forward.

A name like this isn't only about fundamentals, it's also about the chart. Buy at some point, but not here. Definitely write puts around $400-420, and get paid the premium.

Reasonably good company. All companies are trying to monetize AI. Single product risk, and he's always wary of those companies. He prefers the consolidators for boosting revenue and cashflow. A wait-and-see story.

He likes that it's trading at lower and lower valuations. He sold this as shares ran up, because expectations were exhuberant and when investors felt that the company's AI wasn't growing fast enough. But he may move back into this at $450.