u/RoryAtDMI ·
Reddit — r/ValueInvesting
· June 16, 2026 at 12:49
· ⬆ 16 pts
· 💬 148 comments
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AI Summary
Summary
The author (u/RoryAtDMI) argues that Adobe (ADBE) is deeply undervalued after a ~10% post-earnings drop, citing a 12% FCF yield, strong enterprise retention, and accelerating AI-related ARR.
He challenges the bear case that AI will disrupt Adobe’s moat, providing anecdotal evidence from conversations with creative pros and enterprise users that workflows remain deeply embedded.
Quality assessment: Well-researched due diligence with primary research (industry interviews) and financial analysis; includes acknowledgment of counter-arguments, making it a credible value thesis.
Score16
Comments148
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Adobe ( $ADBE ) just reported a **double beat,** **raised guidance**, but *dropped \~10% *
A *12% FCF yield,*means the market is assuming not just slower growth, but actual permanent structural decline.
I work in creative land and was buying around $250, but at \~$205 now I'm backing up the truck.
I've been doing research and [free deep dives](https://open.substack.com/pub/durableinvesting/p/why-im-backing-up-the-truck?r=8iygzz&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true) and expected to find a value trap but came away leaning strongly the other way.
I spoke personally with plenty of creative pro's, agencies , enterprise users & even if Adobe is often hated by its users, it's still deeply embedded in their workflows.
**My Q: What is the strongest evidence that Adobe's moat has broken?**
Not "AI will disrupt everything" , but actual evidence you can send me that enterprise customers, agencies, or professional creatives are leaving the ecosystem in meaningful numbers. NOT low-end, individual users but actual, real enterprises stopping their subscriptions.
I just can't see anything backing up this AI narrative, but I'm very happy to be proved wrong.
**TLDR of the piece on what stood out from Q2 earnings for me:**
• Enterprise segment remains strong -- this is key to the bull case as these are 70% of subscriptions
• AI-related ARR continues to grow rapidly -- this negates a lot of bear cases that argue they're being disrupted
• Large value customer growth is healthy - they called this out specifically
•Customer retention appears intact - but C Suite not so much as the CFO gets poached by Marvell
• Management is prioritising user acquisition and lifetime value over near-term ARR growth
*The bear case is obvious but unproven:*
* *AI commoditises creative software & pricing power erodes*
* *Future generations of creators never enter the Adobe ecosystem*
* *CEO/CFO transition adds uncertainty*
ADBE trades at a 12% FCF yield post-earnings despite a double beat and raised guidance; enterprise subscriptions (70% of total) remain strong and AI-related ARR is growing rapidly. The market is pricing in permanent structural decline (e.g., AI commoditization), but the author’s primary research shows no meaningful enterprise churn—creating a mispricing opportunity as the fear is unproven. Long ADBE as a value play based on a temporarily dislocated valuation, supported by durable recurring revenue, sticky enterprise customers, and a growing AI monetization engine. CEO/CFO transition uncertainty; if future generations of creators bypass the Adobe ecosystem or if low-end AI tools eventually penetrate enterprise workflows, the moat could weaken. Also, the counter-argument article warns of “hairlines” in fundamentals.