Top Value Investor Says Adobe Stock Is ‘Very Compelling’ Despite AI Threat

The post Top Value Investor Says Adobe Stock Is ‘Very Compelling’ Despite AI Threat appeared first on 24/7 Wall St..

Value investor Tobias Carlisle made a contrarian case for Adobe (NASDAQ:ADBE) on a recent episode of The Investor’s Podcast, telling co-hosts Stig Brodersen and Hari Ramachandra that “I think the valuation’s very compelling” and pointing to a “big discount” and “a lot of buybacks” at the creative software giant.

Carlisle’s pitch lands at a time when the stock has clearly fallen out of favor. Adobe shares closed at $195.16 on Thursday, June 18, 2026, down 44.24% year-to-date and 48.38% over the past year. The market cap now sits near $77.58 billion, with the stock trading at a forward P/E of 8 and a PEG ratio of just 0.53.

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The AI Question at the Heart of the Thesis

Carlisle’s argument hinges on an open question: whether generative AI ultimately disrupts Adobe’s core editing tools or gives the company a tailwind. “Maybe that’s where Adobe really shines, that you can do all of the idea creation and really simple stuff in ChatGPT or whatever LLM you use,” he said, while complex editing remains Adobe’s domain. He grouped Adobe alongside Booking Holdings (NASDAQ:BKNG) as both being established software platforms facing existential questions from generative AI.

He framed the discount that both stocks are seeing as compensation for that uncertainty: “If it is sort of temporary or they can adapt or be beneficiaries, then you’re getting a good price. You’re getting a good handicap price to take it on here.”

Adobe’s Recent Results

In Q2 FY2026, the company posted record revenue of $6.62 billion, up 13% year over year, with non-GAAP diluted EPS of $5.96. AI-first ARR tripled year over year, exceeding $500 million, and total Adobe ARR reached $27.10 billion. Management raised full-year guidance to $26.50 billion to $26.60 billion in revenue and non-GAAP EPS of $24.35 to $24.45.

On the buyback front, Carlisle flagged, Adobe repurchased roughly 8.5 million shares for $2.111 billion during Q2, following approximately 8.1 million shares for $2.478 billion in Q1. Operating cash flow reached $2.17 billion in the quarter, giving management ample room to keep shrinking the share count at depressed prices.

The Bear Case

Sentiment around Adobe stock has been ugly. CEO Shantanu Narayen sold 75,000 shares on April 28, 2026, at prices between $243 and $245, ahead of the stock’s slide. Leadership is also in flux, with CFO Dan Durn departing June 15, 2026, and Steve Day appointed interim CFO, on top of CEO Narayen’s previously announced transition after 18 years at the helm.

Wall Street has not given up. The consensus analyst price target is $282.27, compared with a current price near $195. For investors weighing Carlisle’s take, the question is whether Adobe’s 35.3% operating margin and 62.9% return on equity will hold up as generative AI tools mature.

The post Top Value Investor Says Adobe Stock Is ‘Very Compelling’ Despite AI Threat appeared first on 24/7 Wall St..