Adobe’s stock has lost approximately 43% of its value this year and is trading at a P/E ratio of around 11, well below its historical average. The market fears that generative artificial intelligence will undermine the software giant’s business model from within. Yet the company is reporting record revenue, double-digit growth, and massive free cash flow. Is this a justly punished casualty of the AI era, or one of the cheapest high-quality stocks on the entire U.S. market?

Few stocks have divided investors as sharply this year as Adobe. As recently as 2021, it was one of the market’s darlings, with a price exceeding $680 and a market capitalization of over $300 billion. Today, the same company is trading around $199 per share, and its market value has fallen below $80 billion. Yet this slump isn’t accompanied by any accounting disaster or revenue collapse. On the contrary, Adobe has just reported a record quarter and raised its full-year outlook. Nevertheless, the market is punishing it…