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In today’s issue:
📺 What makes Adobe an interesting stock to watch?
🚀AI Tools You Must Try
🎓AI agents now read your docs almost as much as humans do
💼 Tech & AI Jobs I saw on my LinkedIn Feed
The House on the Corner
Imagine there's a house on the corner of your street listed for $500K while every other house is going for $1 million. You buy it thinking you found a deal of a lifetime. Then you move in and find out that the roof leaks. The foundation is shifting. Six months in, you've spent $500K on repairs and you're still not done. The cheap house was cheap for a reason.
That house was a value trap. And right now, the stock market thinks Adobe is one too.
A value trap is a stock that looks cheap based on traditional valuation metrics but ultimately fail to provide the return that investors seek.
When analysts value a high-growth tech company, they believe that the company has some sort of a moat which drives future earnings potential.
The moat is usually high switching costs, network effects, or some proprietary technology competitors can't replicate. A strong moat means the earnings of that company can compound beyond the few years you can forecast.
That future earnings potential, discounted back to today, is called the terminal value. For high growth software companies, terminal value represents somewhere between 60% and 80% of the stock price. This is why growth companies trade at high multiples, often 30 to 50 times earnings.
The question every software company has to answer right now.
Can an LLM replicate what we do? Or is it disrupting the way customers interact with our service? If the answer is yes, or even a maybe, the moat isn't a moat anymore. And if the moat is gone, the terminal value is gone.
Adobe is being asked the same question by the market right now.
Adobe built one of the most dominant software businesses in history.
Photoshop. Illustrator. Acrobat. Premiere. Even today, Adobe has over 50% market share in professional creative software.
In 2026, Adobe is expected to generate ~$26.5bn in revenue with a ~90% gross margin and over $10bn in free cash flow.
Revenue has grown 36% since 2023 while free cash flow has grown nearly 50% since. However, the stock is down ~70% from its peak in 2022. At current market cap of ~$78 billion, it trades at ~8x its forward cash flows.
By almost any traditional metric, this looks cheap for a company of this quality.
The bear case for Adobe rests on two arguments:
Adobe is still growing revenue ~11% annually, but much of that growth is coming from price increases rather than adding meaningful new users. Price increases can boost revenue for a while but they don't create new demand.
The more interesting threat is behavioral. Five years ago, creating a YouTube thumbnail meant opening Photoshop. Today many creators open ChatGPT, Midjourney, Higgsfield, or Canva first. The workflow has already started changing. The next generation of creatives growing up right now may never learn a creative tool like Photoshop.
These newer tools are also far easier to build than they used to be, which means more competitors, not fewer.
The bulls also make a credible case.
AI tools are creating millions of new creators who otherwise would never have touched Photoshop. The easier content creation becomes, the more content gets created.
Some of those creators will eventually hit the limits of AI tools and graduate into professional software. If that happens, Adobe remains the natural destination.
The market expands rather than contracts.
What makes Adobe an interesting stock to watch?
Adobe is a great company today. The question is whether it will still be a great company 10 years from now.
And until that answer becomes clearer, Adobe may remain the house on the corner that looks like a bargain from the outside.
Full Disclosure: I don’t have an open position in Adobe. This is not financial advice. The purpose of this essay is educational.
AI Tools You Must Try
🔎 Compound AI: My favorite AI tool for financial modelling. It's a native web-based spreadsheet rather than a clunky Excel plugin. It's the first AI modeling tool that's actually changed how I work.
🚀 Gamma: Gamma helps you build consultant-level slides, it does the research and the design for you, so you're not staring at a blank deck wondering where to start.
📱 B12: B12 is great for spinning up a polished, functional website in minutes, ideal if you need something live without hiring a designer.
👨🎓 DeepTutor: An AI-powered research assistant built for academic, corporate, and professional analysis — going far beyond basic text retrieval.
AI agents now read your docs almost as much as humans do
5% of traffic to your docs is now AI agents, not humans. If your documentation isn't structured for machine readability, your product is invisible to Claude, Cursor, and every other coding agent your buyers use daily. Mintlify is built for both audiences.
Tech & AI Jobs I saw on my LinkedIn Feed
Most of the roles I am seeing getting posted are for social media and GTM. Probably because of my algorithm but also great marketing + GTM people are so valuable and hard to find.
I’ll keep an eye for engineering + finance roles too for the next issue.
Google: Hiring candidates to drive strategic partnerships for its ad products
Waymo: Hiring a compensation analyst
Harvey: Hiring a Social Media Manager (200k+ + Equity)
Airbnb: Project Managers Early Career ($132k - $154k + Equity)
Otter AI: Hiring Customer Success Managers
SeatGeek: Hiring Organic Social Media Managers
Moshi: Hiring Founding GTM
Yubo: Freelance Marketing Managers
Three small things before I go:
Hit reply with anything — a word, an emoji, a thought. I read every one.
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Find me on Instagram at @tabarakrehman_ — that's where the conversation lives between sends.
See you soon. Keep on Keeping on.
Tabarak Rehman