THE TRUTH ABOUT ADOBE
ADBE Forward P/E, Koyfin
Adobe just hit a new all-time low Forward P/E.
In the world of expectations investing, this means markets are losing confidence on Adobe’s ability to keep delivering results in the future.
It also means next twelve months EPS growth rates are rising (now 16.7% for 2026 according to analysts.)
We begin our Adobe deep dive with this fact, because historically, it matters more than anything your advisor may tell you about this company.
Since 2000:
Adobe has only traded below 20.0x Forward P/E for 11 out of 67 quarters (16% of the time)
Out of these 11 quarters, 9 were followed by positive returns in the next year (82% of the time)
These positive returns ranged between 5% and 25%
All to say, in plain English,
We are faced with an extremely high-probability setup in Adobe given today’s valuation and historical setup.
Mathematically, we only have a 13% chance of losing money buying here (frequency adjusted.)
I’ve shown you the math, now let’s talk about the drivers behind this outcome.
The market narrative around Adobe is that “AI will kill it”, which is a very real possibility given the advancements and powerful capabilities found in AI.
However,
These disruptions would have to show in the business and its results.
Specifically:
Subscriber growth and average revenue per user
Margins
Market share
Roughly two years after ChatGPT and Anthropic began competing in the creative workflow, none of these have shown up in Adobe.
In fact,
The company has beaten expectations for 14 consecutive quarters, all while growing their AI-related revenues and continuing to gain in other areas.
Which leaves us with one question to answer in today’s deep dive:
Can Adobe Get Back to $600?
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