The last time Adobe (ADBE) traded this low was in May 2023, 27 months ago. In that time, Nvidia's (NVDA) stock has gained 546%. The shine has certainly worn off for the maker of creative software programs like Photoshop and Acrobat. 

While the company’s business model has successfully transitioned to cloud-based subscriptions that utilize AI to serve creative professionals, investors have become skeptical about its future growth, resulting in a significant erosion of market value over the past 12 months. 

At first glance, Adobe appears to be too cheap to ignore. However, markets often get it right about the future potential of a company’s products and services. With Barchart’s Technical Opinion screaming “Strong Sell,” it might not be the best value play right now. 

Here’s my two cents on the pros and cons of buying Adobe stock at 52-week lows.

It’s Unwise to Catch a Falling Knife

The Adobe chart for the past three months is not a pretty picture. Its shares have lost 14% of their value, and the decline has been almost consistently on a slow march lower. Momentum is down, not up. 

 www.barchart.com

It’s been a while since I’ve paid close attention to the state of Adobe’s business, so I need to take a closer look at the issues plaguing it right now. 

On Tuesday, Barchart contributor Aditya Sarawgi discussed whether the outlook for Adobe stock was bullish or bearish. The answer based on the chart above would seem obvious. However, there remain some optimistic data points working in Adobe’s favor. I’ll get to those in the next section.

In the meantime, my colleague pointed out that a troubling aspect of Adobe’s growth has cropped up from the company’s RPOs (remaining performance obligations). They were $19.69 billion at the end of Q1 2025, below analyst expectations. They were the same $19.69 billion at the end of Q2 2025.  

Analysts are concerned that the company’s AI tools rolled out over the past 12-24 months aren’t the moneymakers that Adobe claims them to be. That’s a debate that remains open to debate, especially given the other products in the market it competes with, such as Canva’s Image Generator. 

Barron’s reported on Monday that Melius Research analyst Ben Reitzes downgraded Adobe stock to Sell from Hold while cutting his target price by $90 to $310, below its current share price. 

“He [Reitzes] believes that as AI continues to evolve, software players are at risk of losing out to companies that create the infrastructure to power autonomous agents, or agents that execute software tasks automatically,” Barron’s contributor Angela Palumbo wrote.

“‘It can get worse for SaaS [software as a service] players like Adobe, Salesforce, Workday etc. — and see value continuing to shift toward infrastructure winners like Microsoft and Oracle,’ Reitzes said.”

That’s a possibility that investors have taken to heart. Hence, the 30th new 52-week low. 

The Glass Is Half Full at Adobe

There remains a lot to like about Adobe, especially at its lower valuation. 

For example, in mid-June, when the company released its Q2 2025 results, it raised its full-year guidance for revenue and earnings. On the top line, it now expects revenue of $23.55 billion at the midpoint of its guidance, up from $23.45 billion previously, the same number as Wall Street. On the bottom line, it expects earnings per share of $20.60, up from $20.35 previously, and 21 cents higher than analyst expectations. 

As a result of its falling share price, it now trades at 16.7 times its current share price of $345. According to S&P Global Market Intelligence, that’s the lowest multiple in the past decade. Investors are facing a better risk/reward proposition than they’ve faced in a very long time. 

The last time its shares were at this level was in May 2023. At that time, its shares were valued at nearly 25 times its projected earnings per share. So, even though its earnings on a per-share basis in 2025 are expected to be roughly double what they were in 2023 -- $11.82 a share -- investors at the time were willing to pay 50% more for those lower earnings. 

Adobe’s revenue growth in 2023 was 10.2%, just 120 basis points higher than the projected earnings in 2025. Is 120 basis points of extra growth worth a 50% premium? That’s a big no. 

While the company’s net debt of $868 million is significantly higher than the $3.76 billion in net cash on its balance sheet at the end of fiscal 2023 (November year-end), its total debt of $6.58 billion as of May 30 was still just 0.7 times its $8.88 billion in EBITDA (earnings before interest, taxes, depreciation and amortization).

The Bottom Line on Adobe Stock

If you’re like me and believe that large-cap stocks are overvalued -- according to Yardeni Research, the forward P/E ratio for large-cap stocks is 22.1x, while the Magnificent Seven forward P/E is 29.5x -- one could make the argument that Adobe stock is most definitely undervalued. 

That’s not to say that investors aren’t right to be skeptical of the company’s future growth. 

However, given that 25 of 35 analysts still believe ADBE stock is a Buy (4.26 out of 5), it trades at just 16.7 times its 2025 earnings per share, and there is plenty of options volume to lay down a bet that Adobe is undervalued at current prices, I say it is too cheap to ignore especially if you are an aggressive, risk-tolerant investor.

I like Adobe stock at current prices.