6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 107
Adobe Inc. (NASDAQ:ADBE)’s approach to augmented reality is seamlessly integrated into its Creative Cloud platform, utilizing tools like Adobe Aero. Aero enables users to create interactive AR experiences without needing advanced coding skills, making it accessible and user-friendly. This approach taps into the vast community of creative professionals already familiar with Adobe’s software interfaces.
Adobe Inc. (NASDAQ:ADBE)’s revenue increased by 10% year-over-year in the quarter ending May 31. For the fiscal third quarter, the company expects adjusted earnings per share between $4.50 and $4.55, with revenue ranging from $5.33 billion to $5.38 billion. Analysts had predicted $4.48 in adjusted earnings per share and $5.4 billion in revenue. In addition, the company’s Digital Media segment, which includes Creative Cloud subscriptions, reported net-new annualized recurring revenue of $487 million, surpassing the consensus estimate of $437.4 million.
Analysts at Deutsche Bank were particularly optimistic about Adobe Inc. (NASDAQ:ADBE), adding the stock to their Fresh Money list, which highlights top investment ideas. They believe that Adobe’s Creative Cloud division will continue to grow, especially with the incorporation of generative AI products. The firm raised its price target for Adobe Inc. (NASDAQ:ADBE) to $650. Additionally, Mizuho analyst Gregg Moskowitz noted that the potential for AI monetization at Adobe Inc. (NASDAQ: ADBE) is being “underappreciated” by the market.
Alger Focus Equity Fund stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q1 2024 investor letter:
“Adobe Inc. (NASDAQ:ADBE) is a diversified software company that provides document and creative software to a wide audience, including creative professionals and enterprises. Its flagship products, such as Photoshop, Acrobat, and Creative Suite, set industry standards like PDF and Flash, supporting a broad range of Adobe applications. As such, we believe Adobe is a primary beneficiary of the digitization (i.e., converting analog information into digital format) spending theme. Recently, the company announced a generative Al (Gen Al) tool called Firefly which is a family of creative GenAl models which will be incorporated into Adobe’s product suite, which can be utilized by consumers and enterprises to potentially save time and effort by automating tasks like image and text generation. We believe Adobe has the potential to leverage Al by integrating software programs into its existing products and enhancing developer Application Programming Interfaces (APIs) to facilitate Al-driven workflows. While the company delivered strong fiscal first quarter operating results, shares detracted from performance after management lowered their fiscal second quarter guidance with Al related growth acceleration being pushed out into the second half of 2024 due to difficult year-over-year pricing comparison. particularly within their creative vertical segment.”
