ADOBE - All you Need to Know - MASTERPLAN & THESISAdobe Inc.NASDAQ:ADBETheIntelligentInvestorAdobe AI Bull Thesis During peak uncertainty, markets bottom. Bottoms are usually met with four criteria: the stock is massively hated with peak pessimism, underowned with everyone bearish and analysts slashing price targets, undervalued at historically cheap valuation metrics, and technically oversold after cleaning out the books and flushing out margin. This is exactly when great opportunities are created. All great companies have suffered 50%+ drawdowns at some point. Irrational markets that overshoot up and down are there to serve you, not guide you. The job is to take advantage and buy during panics — or feed the birds during euphoria. Adobe fits this setup. The market is treating Adobe like an AI loser, but I believe that is wrong. Adobe is an AI winner. Agentic AI is not a headwind to Adobe. It is a major tailwind because it should increase usage, unlock more of the suite, deepen enterprise workflow integration, and make Adobe even more central to content creation. MY AVERAGE ADBE ADBE At a $240 average cost, Adobe can be viewed like an equity bond that constantly grows its interest. If Adobe earns roughly $27.50 in 2026 EPS, the earnings yield at my cost is about 11.5%. That is extremely attractive for a high-margin, asset-light software business with a huge enterprise moat, strong pricing power, and a growing global creativity market to capture at the top of funnel. FUNDAMENTALS Fundamentally, they trade at 7.5 Earnings right now at 190 on June 22, 2026. They have average annual gross margins of 90%, net margins of 30%, and free cash flow margins of 42%. They have 27B more capacity to buy back stock, and continue buying at very suppressed levels. They also have very seasoned staff that won’t stop or miss a beat during the swap of CFO, and CEO moving to Head of Board. Jensen Huang’s point is the core of the thesis: traditional point-and-click software leaves most of Adobe’s power underused. Users may only touch a small percentage of what Photoshop, Creative Cloud, Firefly, and Adobe’s full platform can actually do. Agentic AI changes that. Instead of users manually searching through tools, the user expresses intent and the agent unlocks Adobe’s capabilities for them. That means higher usage, faster creation, more experimentation, and more output. This is why AI does not replace Adobe. AI makes Adobe more useful. Adobe is also moving from standalone tools to enterprise workflow orchestration. Creative Cloud, Firefly, Adobe Agents, Adobe Experience Cloud, and Adobe’s enterprise content supply chain can connect creation, editing, personalization, targeting, campaign deployment, and measurement. That makes Adobe deeply embedded inside the enterprise content workflow. The strategy is clear: Adobe is focused first on usage and MAU. Firefly has reportedly grown around 70% year over year to roughly 100 million monthly active users. Adobe is putting itself everywhere users create, capturing the creativity boom, building freemium adoption, and increasing top-of-funnel usage. The monetization comes after. This is a land-and-expand strategy. First, dominate usage. Then, once users rely on the product, Adobe can strategically monetize through subscriptions, premium features, AI credits, and enterprise conversion. They have not fully pressed the gas yet on stage two. What the Bears Say That is why the market is underestimating the setup. The market sees uncertainty around AI disruption, CEO/CFO changes, ARR growth slowing down quarter over quarter the last 13 quarters, and the timing of AI monetization. But once Adobe proves that usage is converting into ARR growth, the rerate can happen quickly. (This is the key: While competition is increasing at the lower end of the creative market and ARR growth rate is slowing, their freemium plan is already proofing to work. And they haven't pressed the green light on converting them yet.) At a conservative 15x forward earnings multiple on $27.50 of 2026 EPS, Adobe is worth around $410, which is very reasonable by 2027. If confidence fully returns and ARR growth reaccelerates, the multiple can move toward 18x–20x forward earnings. And if earnings keep growing beyond 2026, the long-term price target moves even higher. The enterprise side is a major part of the conviction. Enterprise customers make up a majority of Adobe’s revenue, and that business grew around 20% year over year. Adobe’s real moat is the enterprise workflow, brand trust, content governance, creative ecosystem, and ability to scale personalized content across organizations. In simple terms: Adobe is building the usage base first. The market is focused on short-term uncertainty, but Adobe is playing the long game. If usage converts into ARR growth, the combination of earnings growth and multiple expansion can drive a much higher stock price. My plan is to do nothing and hold. Exit Scale Out framework •At 13x forward EPS, Adobe is around $333, which is the bare minimum rerate case to exit margins. •At 15x forward EPS, Adobe is around $410, which is a reasonable target by 2027. (this is where I would offload everything and move on) •At 18x forward EPS, Adobe becomes a much larger long-term compounder if ARR growth reaccelerates. And your looking at 500 area by 2028 Bottom line: Adobe is not broken. Adobe is misunderstood. AI is a software tailwind, not a software headwind, and Adobe is one of the clearest beneficiaries because it owns the creative workflow, the enterprise content workflow, and the tools needed to scale the next wave of personalized digital content.