Adobe: A Dope Buy or a Dopey?
Welcome to the Schmoozeletter Blog. Your source for weekly water cooler wisecracks from the world of finance. If you have an opinion different than mine or a topic you want to hear about, let me know!
This week, we’re talking about:
Adobe: A Dope Buy or A Dopey?
What a title, eh? I said to my wife, “Adobe: A Dope Buy?” and she erupted with laughter. “What excellent wordplay!” she chortled while gasping for air as she nearly fell over with amusement.
I may be exaggerating.
In reality, she didn’t respond until I said, “Did you hear me?” She confirmed that she had and immediately changed the conversation to something she actually cared about.
Anyway…
Forget everything you know about Adobe!
Let’s pretend we don’t know the business model at all and let’s just look strictly at the financials. If you’re just going by the fundamentals, it’s looking like:
Adobe: A Dope Buy!
The fun thing about investing in public companies is they tell you what they’re going to do with pretty good accuracy.
Okay, maybe not every company.
But one corporation that has been pretty consistently meeting or exceeding its estimates is ADBE.
And here’s what the Acrobat folks say about their full year 2025.
Which would put the low end of their earnings per share at about:
Just a casual 33% increase from 2024.
And the low end of their total revenue at about:
A 10% increase from 2024.
(If only there were an editing software that could make these look more professional.)
Like predictability of revenue? See if you can spot the trend on the quarterly chart.
And the future revenue is looking stronger than ever.
Since this is a techy software company with these strong fundamentals, you might be thinking the stock is expensive.
On the contrary!
ADBE is trading at a discount to the average S&P 500 company and a pretty steep discount to the average tech company.
It’s not like analysts expect their double-digit growth to slow down in the coming years.
If they keep doing what they’re doing and we see slight multiple expansion, it looks like the stock price will double from the current price over the next five years.
So what gives?
What makes the company:
Adobe: A Dopey!
Bears aren’t so convinced the good times will keep rolling.
The Golden Gate Bridge is full of shit with its “weak Q4 guidance.” The company raised projections last quarter, not lowered them. You’d think a bridge would understand raised vs. lowered but then again, it calls itself golden when it’s orange.
Definitely take your investment advice from a different bridge. My top three bridges for stock picks have to be:
1. Duge Bridge
2. Sunshine Skyway Bridge
3. Ruyi Bridge
Golden Gate isn’t in the top fifty, and there are some dumb bridges out there.
Anyway…
Out of the large inanimate objects making critiques in that screenshot, it’s the cliff that would have me the most worried as an ADBE investor.
“Stuck as a wrapper.”
A dopey, the wrapper?
Oh, with a W?
Adobe is wrapping all the latest and greatest tools from the AI models of Gemini, Veo, OpenAI, and the gang into its software. But it’s not making the AI. It’s only integrating it.
This is clearly profitable for the company, and that could continue for a long time.
Or not.
There’s a big threat that customers turn away from the Milli Vanilli middleman and go straight to the source.
There will definitely be big winners and losers in AI, and Adobe could certainly fit into either category.
I’m just a pea-brained simpleton accountant, so I don’t like a business model with uncertainty.
If only there were a company that was creating the AI and also had the world’s largest search engine, a dominant cloud platform, the world’s leading streaming service in YouTube, the world’s leading autonomous driving company, and the world’s leading quantum lab of Nobel Prize–winning researchers working on the next big tech.
It’s Google.
What kind of investor be buying ADBE when they can just be buying GOOG?
A Dope Be.
Final Thought
“Beware the investment activity that produces applause; the great moves are usually greeted by yawns.” – Warren Buffett
