Every week I like to step back and look at the companies I’m studying, researching, or waiting for the right price to buy. Markets move quickly, narratives change, and sometimes the best opportunities show up when sentiment shifts.

This week I’ve been spending a lot of time analyzing Adobe ($ADBE) after its most recent earnings report. At the same time, I’ve been updating my watchlist with companies that I believe could be long-term compounders if the business continues to execute.

Let’s start with Adobe.

Adobe has quietly become one of the most dominant software companies in the world. Its ecosystem is deeply embedded across creative professionals, businesses, and enterprises.

Products like Photoshop, Illustrator, Premiere Pro, Acrobat, and Creative Cloud have become industry standards. Once a designer, marketing team, or company integrates these tools into their workflow, switching costs become extremely high. This is one of the reasons Adobe has been able to build such a strong recurring revenue model.

The most recent earnings report reinforced how powerful this model is.

Adobe reported $6.4 billion in quarterly revenue, representing roughly 12% year-over-year growth, and earnings also came in ahead of expectations. Just as important, the company continues to generate enormous amounts of cash. Adobe produced billions in operating cash flow and continues to return capital to shareholders through consistent share buybacks.

One thing that stood out to me this quarter was the re-acceleration in growth. Adobe’s growth rate had slowed slightly over the past few years as the company matured, but the most recent results showed signs of momentum improving again.

This matters because Adobe is now entering what could be a major new cycle of innovation driven by artificial intelligence.

Adobe has been integrating AI into its ecosystem for years, but the company is now pushing even harder into generative AI through tools like Firefly.

Generative AI has the potential to dramatically increase productivity for creative professionals. Instead of spending hours manually editing images or designing assets, users can generate content instantly and then refine it using Adobe’s software.

This has two major implications.

First, AI could expand Adobe’s total addressable market. As creative tools become easier to use, more individuals and businesses may adopt them.

Second, AI could enable Adobe to introduce new premium features and pricing tiers, which could drive higher revenue per user.

In other words, AI may not just improve Adobe’s products—it could also unlock a new phase of growth.

I recently ran a five-year scenario model for Adobe to estimate potential outcomes based on different growth assumptions.

Here’s how the model looks:

Bear Case: $391
Base Case: $821
Bull Case: $1,336

This produces a probability-weighted outcome of roughly $838 over the next five years.

My base case assumes about 10% annual growth, which I actually believe is fairly conservative given Adobe’s historical performance.

If Adobe can grow closer to 11–12% annually over the next five years, which is entirely possible if AI accelerates adoption and monetization, the upside could be significantly higher.

Another important factor is Adobe’s consistent share buybacks. The company regularly repurchases stock using its strong free cash flow, which reduces the share count and increases earnings per share over time. This type of capital allocation can quietly enhance long-term shareholder returns.

While Adobe may not look cheap using traditional valuation metrics, companies with this level of quality, recurring revenue, and cash flow generation rarely trade at extremely low multiples.

For long-term investors, the combination of AI innovation, recurring subscription revenue, and strong capital returns makes Adobe one of the most interesting software companies to watch.

Beyond Adobe, here are several companies currently on my watchlist.

These are businesses I’m researching or waiting for the right entry point.

Meta continues to dominate the global digital advertising landscape. The company generates enormous cash flow and is investing billions into AI infrastructure and machine learning capabilities.

If Meta continues improving ad targeting and monetization through AI, its platforms could become even more powerful over the next decade.

Microsoft may be one of the best positioned companies in the AI revolution.

Between Azure cloud infrastructure, the OpenAI partnership, and its dominance in enterprise software, Microsoft sits at the center of multiple long-term growth trends.

Few companies combine scale, profitability, and innovation as effectively as Microsoft.

Nike has faced challenges recently, including slowing growth and margin pressure.

However, the company remains one of the strongest global brands in the world.

If Nike successfully improves execution and stabilizes growth, the current weakness could represent a long-term opportunity.

Hims & Hers is one of the more interesting growth companies in healthcare right now.

The company operates a direct-to-consumer telehealth platform and continues expanding its product offerings.

That said, I’m still watching leadership decisions and potential regulatory risks closely before becoming more aggressive.

MercadoLibre is often described as the Amazon and PayPal of Latin America, and for good reason.

The company operates a powerful combination of e-commerce, payments, and fintech services.

Its ecosystem continues expanding across the region, and the long-term growth runway remains massive.

The Honest Company is a smaller company on my watchlist, but one I find interesting.

The brand continues expanding distribution and product offerings, and if execution improves, the business could potentially see stronger growth over time.

Markets will always fluctuate in the short term.

But long-term investing is about identifying great businesses with durable competitive advantages and allowing them to compound over time.

Companies like Adobe, Microsoft, and MercadoLibre have demonstrated the ability to build powerful ecosystems, generate strong cash flow, and innovate within their industries.

Those are exactly the types of businesses I enjoy studying.

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This newsletter is for informational and educational purposes only and should not be considered financial advice. I am not a licensed financial advisor, and nothing in this newsletter constitutes a recommendation to buy or sell any security.

Investing involves risk, including the potential loss of principal. Always conduct your own research and consider your financial situation before making investment decisions.

Some companies mentioned in this newsletter may be holdings in my personal portfolio, and my opinions may change at any time without notice.