What changed
$ADBE — BUY 📊 | 6 MONTHS THESIS
🎯 FQ2 FY2026 (ends May) | reported Jun 11 | Rev $6.6B | EPS $5.96 vs $5.81 🟢 | Margin 33.8%
💡 Consensus braces for a decline in Creative Cloud due to AI-native tools, but Adobe's Q2 2026 beat and early AI monetization suggest resilience. The stock is priced for a contraction that isn't happening.
📉 Reward/risk: 1.4:1
🏢 Business Quality: 8/10
📊 Valuation: cheap — at $193, non-GAAP P/E ~8x (GAAP ~11x), EV/EBITDA ~12x, FCF yield >10%, versus 5-year historical median P/E >20x. Base DCF implies $250+.
🔮 Catalyst: Q3 FY2026 earnings (exp. Sept 2026) or AI ARR milestone >$1B
💰 Entry: $202.73, stop $170.0, target $250.0
⚖️ Buy ADBE at $193.41 for 30% upside (target $250, 3 months) on extreme pessimism; AI fear is overdone and recurring cash flows are heavily discounted.