Adobe’s AI Pivot Tests Investor Faith in Software Premiums

The investment thesis for Adobe, once a darling of the creative software sector, is undergoing a fundamental reassessment. As artificial intelligence reshapes the digital content landscape, the market is questioning whether the company’s entrenched subscription model can maintain its historical dominance and premium valuation.

A central controversy now surrounds Adobe’s appropriate market price. The stock’s decline has pushed its valuation to levels not seen in years. Currently, Adobe trades at a forward price-to-earnings ratio significantly below the software sector’s average.

This discount becomes even more pronounced in specific analyst models. Some discounted cash flow analyses suggest a fair value of approximately $532 per share, implying substantial upside Read more...