Adobe Systems (ADBE)

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.

It was overbought and has been falling off to today's price which is fairly valued. He feels it has 10 to 11% growth.

He added to it recently. Creative folks won't abandon Adobe's products; it's too embedded in workflows. Fundamentally, this was a great report: beat top and bottom, 11% revenue growth, 15% EPS growth, and net new annualized recurring revenue beat but fell short of forward forecast. Adobe will benefit from AI. You should consider buying this now.

This is a buying opportunity. The AI hype was driving this stock, but that hype is getting flushed out today. They are a leader in their industry, and the costs are too high for a client company to leave Adobe and adopt another company's creative software. Adobe fundamentals remain strong and they will benefit from AI, but not as big as the market was expecting.

Happy that shares are falling today (14%) and wants it to fall another 10% before he buys it back at levels where he previously sold.

EPS of $4.48 beat estimates of $4.38; revenue of $5.18B was marginally above estimates. EBITDA of $2.68B beat estimates by 4%. But guidance was conservative. Adobe's below-consensus 2Q outlook ($440 million vs. $460 million) for Digital Media net new annualized recurring revenue (ARR) stood out as the main sticking point of fiscal 1Q results. Management not raising the annual ARR target after beating 1Q guidance is being perceived as another negative. This is only a minor concern, as Adobe is more focused on new users to its AI products right now and less on monetization. This is the right strategy and should show an improvement in AI monetization in 2H, especially 4Q and in 2025. Digital Experience guidance of just 8% sales growth in 2Q was also disappointing, and may see some improvement in 2H. Adjusted operating margin gained 180 bps to 47.6%, its highest level, but the rate of improvement may taper in 2H on more AI investments. The stock is getting hit hard, but this is not the first time; it remains a global leader with strong expected growth. We would be more inclined to buy once the stock settles in.
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One of the first adopters of AI with Firefly. Mind-blowing commercial productivity application. Trading in low 30s x earnings, with growth still in high teens. Despite runup, still good value and still buying.

A great company. A huge part of the internet is creating content, and Adobe is the centre of that. A long-term buy. Great balance sheet. It won't go up 30% year after year, but you can sleep at night owning this. They're broadly into AI and will continue to benefit from it.