10 AI News Investors Shouldn’t Miss

Page 9 of 9

1.     Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 123

Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions. On December 12, UBS analyst Karl Keirstead maintained a “Hold” rating on Adobe and set a price target of $525.00. Keirstead has given the hold rating due to the modest outlook for Adobe’s stock performance. One factor that the analyst noted is the projected growth rates for Adobe’s Digital Media revenue and annual recurring revenue (ARR) in FY25, demonstrating limited upside from artificial intelligence. This has been a key focal point for investors.

Moreover, growth momentum also looks challenged as evidenced by recent growth in new ARR for its Creative segment (which fell short). Adobe’s plans on making money from artificial intelligence by introducing specific new product tiers, instead of increasing prices across all products, hasn’t met investor expectations either. Consequently, the company’s valuation multiples appear high due to its growth profile and slow AI monetization. The lower price target by the analyst reflects all these considerations and a hold stance will be maintained until clearer signs of AI-driven growth materialize.

While we acknowledge the potential of ADBE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.

Page 9 of 9