15 Best Growth Stocks to Buy for the Next 5 Years

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4. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 123

5-Year Revenue CAGR: 14.00%

Upside Potential as of January 15: 49.00%

Adobe Inc. (NASDAQ:ADBE) is a software company that is known for its creative products including Photoshop, Illustrator, InDesign, Acrobat, and Premiere Pro. It has made strides with its Firefly GenAI technology and has been integrating AI capabilities across its Creative, Document, and Experience Clouds. This move aims to enhance user productivity and expand product offerings.

Earlier on 20 November 2024, Morgan Stanley analyst Keith Weiss gave a Buy rating on the shares of the company with a price target of $660.00. However, investors expressed concerns about the potential delayed returns from the company’s investments in AI-powered software applications. For this reason, its stock declined following a 2025 revenue forecast of $23.3 to $23.55 billion, falling short of analysts’ expectations of $23.77 billion. Still, Constellation Research’s Ray Wang remains optimistic about Adobe Inc. (NASDAQ:ADBE) in 2025, due to the company’s strong position as an AI derivative.

The company launched several AI models in 2024, including Firefly, which powers advanced GenAI capabilities for images, vectors, designs, and videos within core applications like Photoshop and Premiere Pro. AI-driven creativity contributed to record FY2024 revenue of $21.51 billion, an 11% year-over-year increase. Since its March 2023 beta release, Firefly has generated over 13 billion images.

Polen Focus Growth Strategy increased its holdings in the company, anticipating revenue growth which it expects Firefly to deliver. Here’s what it stated in its Q3 2024 investor letter:

“We added to several existing positions in the quarter including Adobe Inc. (NASDAQ:ADBE), Workday, Shopify, MSCI, and Paycom Software. We feel Adobe is poised for re-accelerating revenue and earnings growth partially due to the monetization of its Firefly GenAI product embedded in its creative software.”

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