Adobe Systems (ADBE)

Made a buyer's list today. The stock is enjoying a run. Its software and design software has been in a slump, but is starting to improve and looks good looking forward. People will look to this if they move away from stocks that are just AI. This is a name to own if there's a soft landing and not a severe recession. They've been investing a lot in AI which will improve their products. She's confident.

Has relatively attractive margins and been growing their topline, but she isn't sure they can maintain their growth (driven by gen-AI) or margin. It trades above 30x forward, and isn't sure they can maintain that.

Adobe knows how to monetize AI, so it's a good way to play AI. It was held down, but it's now marching higher as it should on recent earnings.

He's concerned whether their products will be cannabilised by AI itself.

He regrets selling this way too early and expects it to come back this year based on their AI-driven software. But he wouldn't build a huge position.

Software has been under pressure. Adobe peaked over $600 when the application side of AI was all the rage. But their last quarters haven't shown that they have monetized AI as quickly as the street expected. Well, these things take time. Now is a good opportunity to enter this. The excitement of AI won't be chips, but how AI will be applied--Abobe.

Hasn't lost market share in graphics. AI benefits haven't come through in earnings, so stock sold off, but they will eventually. Very reasonable valuation for a double-digit grower. He's actively buying on this pullback.

ADBE’s share price has been under pressure recently due to a combination of AI uncertainty and weak earnings from CRM which affected most SaaS companies. ADBE is trading at a 23.7x Forward P/E, which we think is a very attractive valuation for a high-quality business. We believe if investors are bullish on one name, the proper course of action is to stay the course and ride along with it, as the share price reaction after earnings is highly unpredictable - if the share price goes down and its fundamentals remain unchanged, investors could average into the position.
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They have the best creative software suite, but it's very expensive. That's their problem, but he has faith that the CEO will figure this out.

Software/tech sector business appears to be entering weak phase. Ability to raise prices is difficult. Would recommend not investing at this time. Not as much A.I. exposure as Microsoft. Would not recommend buying at this time. 

Beat earnings and revenue expectations last quarter. Great AI exuberance of a few months ago has turned into impatience. Investors want immediate revenue results. He looks at the long-term potential of fundamentals.

On leading edge of using AI as an application, huge impact of letting companies boost margins through productivity growth via AI. This will filter through to the bottom line numbers, stock price will improve.

ADBE has been under tremendous pressure after the most recent earnings release, although the operating results were largely in line with expectations, one of the key reasons for the drop is due to weak forward guidance and the market fear of whether Artificial Intelligence tools could disrupt this business, and negatively affect the growth prospect of ADBE’s over the next few years. ADBE’s management is well aware of this risk and already has some products in place to address this risk (such as Firefly – its generative AI creative tool), the company also has a large repurchase program of up to $25B, which we like. That said, the degree of uncertainty is high here given the risk of technological disruption, we would be okay to hold ADBE here but not a significant position.
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Met expectations, but poor guidance. AI will change how it thinks about its business, but will take a while. Key issue is how to monetize it? At a critical point in incorporating AI. Buy here, as it's shown to execute very well. Regulatory veto, which is hurting all big tech, prevented a favourable acquisition.

It's dropped $140. Got caught up in the AI hype earlier this year. They reported results which showed no benefit yet from AI. Nothing changed with the company itself, but the PE ran up. Company guided for strong growth and they will buy back $25 billion shares over 5 years. This is a long-term winner. His wife is a designer and uses Adobe software. 

An AI play. Recently has been pressured given competition in gen-AI, but analysts were impressed by Adobe at a summit conference recently. The company will include AI across all products. Shares are finding support at $500, so now's a good time to start buying.