Adobe Inc.ADBE · Nasdaq

Why the market may be pricing it low

• Market worries that upstart prompt-based AI creation tools are entering Adobe's core turf, weakening the case for paying for its established creative apps.

  we face increasing competition from companies offering generative and agentic AI solutionsRisk factors

• Adobe's own AI features depend on partner models, and rivals could cut off that access, meaning Adobe doesn't fully control its own AI roadmap.

  may in the future prevent, limit or interfere with our ability to use third-party models in our solutionsRisk factors

What could close the gap

• Repeated confirmation of strong demand for AI-powered offerings across both segments could ease fears that Adobe is losing customers to competitors.

  we experienced strong demand across our Digital Media and Digital Experience offeringsMD&A

How a buyer could still lose (value trap)

• With ROE at 61.9% built on thin equity of $11.76B, the 7.8x price-to-book multiple could compress sharply if core-business growth merely slows.

  Based on the figures below

• If AI-related ethical or safety issues actually materialize into incidents, buyers of the seemingly cheap stock could face reputational and legal fallout.

  Issues relating to the development and use of AI in our solutions may result in reputational harm, liabilityRisk factors

Financial quality (Piotroski F-score)

• ✓Profitable (ROA > 0)
• ✓Positive operating cash flow
• ✓ROA up on last year
• ✓Cash flow exceeds net profit
• ✗Leverage down on last year
• ✗Current ratio up on last year
• ✓No new shares issued
• ✓Gross margin up on last year
• ✓Asset turnover up on last year

Scored out of the checks with data, scaled to 9. Compares the latest year with the year before.

Figures

Sales

$26.0bn

Operating profit

$9.3bn

Net profit

$7.3bn

Operating cash flow

$10.8bn

Cash

$5.6bn

Debt

$2.8bn

Equity

$11.8bn

Latest twelve months to 2026-08-28; F-score for the fiscal year to 2025-11-28