- ADBE
- NOW
This article first appeared on GuruFocus.
Adobe shares <a href="https://www.reuters.com/business/ai-warnings-knock-nasdaq-futures-pressure-tech-stocks-2026-09-14/” rel=”nofollow noopener” target=”_blank”>rose 4.2% to $262.83 Monday as investors rotated toward software companies that could benefit if the AI arms race cools. Adobe (NASDAQ:ADBE), the creative, document and digital-experience software leader, suddenly found itself on the other side of the AI trade as semiconductor stocks were hammered. Reuters highlighted Adobe and ServiceNow among the software winners as investors reconsidered which companies might hold up better if spending shifts away from increasingly expensive frontier-model infrastructure. The valuation picture is striking too: GuruFocus shows Adobe trading 51.6% below its GF Value estimate of $543.01, leaving a wide gap between the current market price and its modeled fair-value level.
The business itself is hardly standing still. Adobe delivered record fiscal third-quarter revenue of $6.76 billion, up 13% from a year earlier, while ending ARR reached $27.5 billion. AI-first ARR surged more than 150%, and customer-group subscription revenue climbed to $6.56 billion. GAAP operating income hit $2.35 billion, quarterly operating cash flow reached a record $2.52 billion, and Adobe repurchased roughly 9.5 million shares. Those are not the numbers of a software franchise quietly being displaced. Adobe is already pushing AI through its existing ecosystem while still converting an enormous installed base into recurring revenue and cash.
That is what makes Monday’s move more interesting than a simple relief rally. Customer-group subscription revenue represented roughly 97% of quarterly sales, while $2.35 billion of GAAP operating income translates into an operating margin of about 34.8%. Adobe does not need AI disruption to disappear. It needs Firefly and its broader AI stack to strengthen engagement, protect pricing and keep customers inside Creative Cloud, Acrobat and Experience Cloud. At $262.83, with the shares sitting far below GuruFocus’ $543.01 GF Value estimate, the market is still pricing in substantial execution risk. Monday’s rally suggests investors may finally be reconsidering how much of that AI threat has already been discounted.
