Adobe Trades at 10 Times Next Year's Earnings. Is It Finally Time to Buy the Stock?

Adobe stock has fallen 29% from its 52-week high and now trades at approximately 10 times next year's projected earnings, a valuation typically reserved for declining businesses. However, the company reported record Q2 revenue of $6.62 billion (up 13% YoY), raised full-year guidance, and its AI-first products tripled to over $500 million in annualized recurring revenue. While generative AI poses a competitive threat, current financial results show strength, suggesting the market is pricing in a decline that hasn't yet materialized in the numbers.