Adobe or Ado-not-to-Be?

See what I did there with that title?  

But seriously, enough world-class comedy.  We need to notice something that’s happening, and it’s a very good example of challenges in this new investing world.

Adobe.  The major software company known for its creative and document management solutions: Photoshop, Illustrator, Premiere Pro, Acrobat…

Yes, lots of free cash flow - from a valuation perspective it’s cheaper than it used to be, by a TON.

But no, that doesn’t automatically make it a buy.

We’re entering a market regime where stocks are being priced in binary terms. 

Do you own the future, or don’t you?

Adobe sits uncomfortably in the middle.

Creative agentic AI is moving fast. Really fast. Have you seen what Nanobanana can do?  It’s off the charts.

Prompt-driven design, video, animation, and editing are getting so good that the old “you need years of training” or…”you need hundreds of expensive Adobe subs in your company” arguments are challenged.

Yes, they have massive institutional adoption and no Nano isn't doing much of what they do.  Yet.

But this is the AI disintermediation phase.

Coding. Designing. Editing. Creating.

Entire worlds facing flattening by tools that turn intent into output - fast.

In that world, what exactly is happening to Adobe’s moat?

If they figure it out, stabilize their ecosystem, and make AI-native workflows feel proprietary again, the stock is mispriced.

If they don’t, margins compress, competition explodes, and Adobe becomes just another platform competing with startups built by five people and a prompt.

That’s why the market doesn’t care about the average P/E or cash flow right now.  Because the E and the "flow" now have the potential to change fast in the most disruptive environment we have ever seen.  

I said 6 months ago that we will be entering one of the most difficult worlds for investors and analysts.  What we thought we knew, we don't.  Toss out, or at least revise the playbooks.

Valuation will matter after confidence returns.  Just like it did on Google.  It can absolutely happen for Adobe, but at the moment the market is wondering... will it happen?  Investors are shooting first and asking questions later.

This is the new reality for a lot of companies:

*Winners will be priced like inevitabilities

*Losers will be priced like obituaries

*And the middle ground is where stocks go to chop traders up

Adobe is a perfect example of the question every investor has to ask in 2026:

Is this company still defining the future - or reacting to it?

Until that’s answered, skepticism is rational.

Mine fields abound in the ultimate age of disruption.

Hans