Why Netflix and Adobe Could Double in Two Years, According to One Investor

Finding stocks capable of doubling within two years typically requires accepting a higher level of risk.

Companies with the potential for outsized gains often experience significant share-price volatility, making the key question not whether risks exist, but whether the potential reward outweighs them.

Based on discounted cash flow analysis and current market valuations, Netflix and Adobe stand out as two companies where the upside may substantially exceed the downside, according to the investment thesis presented here.

Netflix: Streaming Leader Trading Near Lows

Netflix has endured a difficult period, with its shares trading close to their 52-week low.

At approximately $70 per share, the stock sits well below its 52-week high of $127, reflecting investor concerns over slowing momentum and strategic uncertainty.

Using a discounted cash flow model, the analysis estimates Netflix's intrinsic value at approximately $129 per share, implying significant upside from current levels.

One factor weighing on sentiment was speculation surrounding a potential acquisition of Warner Bros. Reports suggested Netflix had explored a deal that could have exceeded $80 billion, prompting investor concerns over capital allocation and integration risks.

Ultimately, Netflix chose not to pursue the acquisition. According to the analysis, the company received approximately $3 billion related to participating in negotiations and agreeing to walk away, an outcome viewed positively by shareholders.

Structural Demand Continues to Grow

Despite recent volatility, the long-term investment case remains centered on the continued expansion of global streaming consumption.

Improving internet connectivity, faster mobile networks and increasing smartphone adoption have made video content accessible virtually anywhere, allowing consumers to watch entertainment throughout the day rather than only at home.

Netflix has also strengthened its competitive position by investing heavily in original programming, reducing reliance on licensed content while expanding operating margins beyond 30%, well ahead of many streaming competitors.

The company's ability to periodically raise subscription prices while maintaining subscriber engagement further supports its long-term profitability.

Mobile Viewing Remains the Biggest Challenge

The primary competitive concern lies in mobile entertainment.

Short-form video platforms such as TikTok, Instagram Reels and YouTube Shorts dominate smartphone engagement, an area where Netflix has comparatively less market share.

Successfully expanding its presence on mobile devices represents one of the company's largest strategic opportunities as viewing habits continue to evolve.

Despite this challenge, the overall investment thesis argues that Netflix remains the leading premium streaming platform in an industry benefiting from long-term secular growth.

Adobe: AI Fears Create Valuation Discount

Adobe represents a different type of opportunity.

The software company has come under pressure as investors question whether generative artificial intelligence could erode demand for its creative software products.

Shares have fallen significantly from their highs, trading near $225 compared with a 52-week high of $376.

Using discounted cash flow analysis, intrinsic value is estimated at approximately $373 per share, suggesting considerable upside if Adobe successfully navigates the AI transition.

Cash Flow Provides Competitive Firepower

Unlike many software companies facing disruptive technologies, Adobe generates substantial cash flow.

The analysis forecasts more than $10 billion in annual free cash flow, providing significant financial flexibility to invest in artificial intelligence, improve existing products and defend its competitive position.

Rather than being displaced by AI, the thesis argues Adobe has the resources to integrate AI directly into its creative ecosystem, strengthening its value proposition for enterprise customers.

Strong profitability also provides management with the ability to accelerate research and development while maintaining shareholder returns.

Leadership Transition Adds Uncertainty

Another factor contributing to investor caution is Adobe's leadership transition.

The current chief executive has announced plans to step down, leaving investors waiting for the appointment of a successor and a clear strategic roadmap.

The market is likely to focus not only on who becomes CEO but also on how the new leadership team plans to position Adobe in an increasingly AI-driven software landscape.

A well-received strategic plan could serve as an important catalyst for improving investor sentiment over the next two years.

Investment View

Netflix and Adobe face very different challenges, yet both have experienced significant valuation compression despite maintaining strong underlying businesses.

Netflix continues to benefit from structural growth in global streaming, while Adobe possesses the financial resources to respond aggressively to AI-driven competition.

The investment thesis assumes both companies successfully address their respective challenges over the next two years. If that occurs, current valuations could prove to be attractive entry points for investors seeking above-average long-term returns while accepting elevated short-term volatility.