RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its “RiverPark Large Growth Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. During the fourth quarter, the markets continued its strong rally with the Russell 1000 Growth Index (RLG) and the S&P 500 index returning 7.1% and 2.4% respectively and RPX returning 5.11%. In 2024, the S&P 500 index and the RLG returned 25.0% and 33.4%, respectively. RPX returned 22.6%. The solid performance of the U.S. stock market in the fourth quarter of 2024 was supported by a rising investor sentiment and solid fundamentals. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, RiverPark Large Growth Fund emphasized stocks such as Adobe Inc. (NASDAQ:ADBE). Adobe Inc. (NASDAQ:ADBE) is a technology company that operates through Digital Media, Digital Experience, and Publishing and Advertising. The one-month return of Adobe Inc. (NASDAQ:ADBE) was -0.38%, and its shares lost 19.81% of their value over the last 52 weeks. On March 7, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $449.40 per share with a market capitalization of $195.443 billion.
RiverPark Large Growth Fund stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q4 2024 investor letter:
“Adobe Inc. (NASDAQ:ADBE): ADBE was a top detractor in the quarter after giving disappointing FY2025 guidance despite reporting strong FY4Q24 earnings. Better revenue growth (+11% versus expectations of +10%), operating margins (47% versus expectations of 46%), and Digital Media Net New Annual Recurring Revenue (“DM NNARR,” a key metric,$578 million versus expectations of $555 million) were driven by both new customers and expansion of existing relationships. Despite these strong numbers, the company guided the current year DM NNARR to $1.9 billion, below expectations of $2.0 billion, leading some investors to speculate on the maturity of Adobe’s business and its competitiveness against emerging AI solutions.
Some investors believe that AI, and Open AI’s Sora product specifically, pose an existential threat to Adobe’s Creative Cloud Suite. We do not share these concerns and believe that AI is a tremendous growth opportunity for Adobe, a view shared by ADBE management. ADBE is the leading software and solutions provider in the content creation and content management space. The company offers a line of products and services used by creative professionals, communicators, businesses of all sizes, and consumers for creating, managing, delivering, measuring and optimizing content and experiences across personal computers, smartphones, other electronic devices and digital media formats. The company has grown revenues in the double-digit percent range for the last decade, and as it enters its 43rd year since its founding, we expect ADBE to continue to grow revenue greater than 10% per year through 2028. The company generates 41% EBITDA margins, which we think can expand to nearly 50%, and we believe the company will more than double last year’s roughly $7.9 billion of free cash flow over the next five years.”
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Adobe Inc. (NASDAQ:ADBE) is in 13th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 117 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the fourth quarter compared to 123 in the third quarter. While we acknowledge the potential of Adobe Inc. (NASDAQ:ADBE) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Adobe Inc. (NASDAQ:ADBE) and shared the list of oversold blue-chip stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.