I'm long Adobe, but not because I think the multiple comes back. At $263 the stock trades on about 13x free cash flow after stock comp, which is roughly $7.9bn a year. That's enough to buy back around 5% of the company annually without taking on debt. Between FY21 and FY25 cash flow grew 8% a year, but per share it grew 11%, because the share count went from 481m to 402m. That gap is what I'm betting on.
My base case gets you about 9% a year over five years. If the multiple recovers to 16x it's closer to 13%. Getting a 30% loss would take revenue falling 5% and margins dropping 800bp together, which I think is unlikely. The main risks are that AI revenue comes at much lower margins, that management keeps spending on acquisitions like Semrush instead of buybacks (Q2 repurchases were down 40% with the stock near seven-year lows), and that Canva and Figma keep chipping away at the core business. It doesn't clear a 15% hurdle, so I'd hold it as a moderate position.