Adobe: Discounted Valuation Amid AI Narrative

about 20 hours ago

"The second stock that I believe could outperform in 2026 is Adobe. Adobe is down 27.5% over the last 5 years and is now trading at 15.5 times forward earnings, which is unheard of for Adobe. The narrative that AI is killing Adobe doesnt hold up because the company is still growing revenues at 10 to 10.5% despite AI technologies like ChatGPT emerging. They mentioned AI 89 times in their investor presentation and are well ahead of their AI targets. With high margins, consistent earnings per share growth of around 12-13%, and stock buybacks reducing shares outstanding, I think Adobe is one of the cheapest stocks in the market and a comeback candidate for 2026."

The speaker argues that Adobe, despite being painted as a casualty of the AI revolution, remains fundamentally strong. Trading at a very attractive 15.5x forward earnings along with solid revenue growth and AI-driven product improvements, Adobe is positioned to benefit rather than suffer. Its high margins and share buyback program further add to its appeal, making it a potential major comeback story in 2026.

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