Burke Wealth Management, an investment management company, released its “Focused Growth Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The market had another outstanding year in 2024, with the S&P 500 rising 25.0%. The strategy had an even better year, with net returns of 28.4%. Looking a bit closer, it is clear that, similar to 2023, 2024 had a rise that was appreciated by everyone, but the overall market returns were concentrated in a small handful of stocks. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Burke Wealth Management 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 -14.69%, and its shares lost 24.13% of their value over the last 52 weeks. On March 19, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $387.89 per share with a market capitalization of $168.69 billion.
Burke Wealth Management stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q4 2024 investor letter:
“Adobe Inc. (NASDAQ:ADBE): Adobe shares fell 14% during the fourth quarter and this company is quickly becoming a case study in what happens when demonstrable AI innovation is slow to translate into demonstrable AI monetization. 2024 was a year of false starts for Adobe. Investors are certainly aware of Adobe’s Firefly product that utilizes AI in content creation. We are also aware of the upcoming release of the next Firefly generation that will do for videos what Firefly 1.0 does for pictures. What is hard to understand is how this level of innovation, which by all accounts is seeing impressive customer adoption, has yet to result in an uptick in revenue growth. As noted, there have been a couple of false starts in 2024 when it looked like monetization was imminent. However, the company’s third quarter results and the initial guidance offered for 2025 raised more questions than they answered. Innovation breakthroughs on the high end coupled with rapid customer adoption that doesn’t translate into faster revenue growth means one of two things: either management has gotten way too cute trying to set a bar for guidance that can and will be easily cleared or, there is some material weakness on the lower end of the business that is offsetting the gains in new AI driven products. We think it is the former, but we must admit that our conviction in this view is not as high as it had been prior to Q3 results. Adobe has a long history of setting and exceeding low guidance bars and if this is in fact the case once again, I’ll be relieved but would contend that management’s under-promise/over-deliver game is one that has created whiplash for its investors. Still, we must entertain the idea that there is low end weakness that is not readily identifiable. We will be watching the next two earnings releases very closely because if the gains from the AI innovation that Adobe has brought to bear fail to reveal themselves in the numbers by the second half of 2025, something else is at play. Adobe is on the clock.”
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 stocks Jim Cramer recently discussed. The Q4 2024 letter from Columbia Threadneedle Global Technology Growth Strategy noted that despite solid quarterly results, Adobe Inc.’s (NASDAQ:ADBE) shares dipped as its growth outlook left investors dissatisfied. 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.