We recently published a list of Wall Street Analysts Can’t Stop Talking About These 10 AI Stocks. In this article, we are going to take a look at where Adobe Inc (NASDAQ:ADBE) stands against other stocks Wall Street analysts can’t stop talking about.
Henry Ajder, Latent Space Advisory founder, said in a latest program on CNBC that lack of fresh data remains a key challenge for the performance of AI systems after a period of “huge” developments and fast learning.
“I think data is the real problem here. We have a finite amount of data available on the internet and a limited number of sources for live, fresh data. I believe this is becoming an increasingly significant challenge, especially as legal issues surrounding how companies obtain and use data are becoming more prominent,” the analyst said.
Ajder believes there won’t be a complete “halt” to the progress in AI systems but in 2025 we are expected to see a slowdown. Answering a question about the AI’s ability to make up data, called synthetic data” to train itself, the analyst said this domain has shown promise but there are risks of synthetic data potentially corrupting the training models.
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For this article we picked 10 AI stocks currently trending based on latest news. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Adobe Inc (NASDAQ:ADBE)
Number of Hedge Fund Investors: 123
Charlie Miner from Third Bridge recently explained on Schwab Network the core problems faced by Adobe.
“What Adobe Inc (NASDAQ:ADBE) is really struggling with right now is the lack of a growth catalyst. You can go back to the fall of 2022 when they proposed a $20 billion acquisition of Figma. They knew their core business, the digital media segment, was slowing in growth. Because that deal fell through and with the development of generative AI, Adobe is now looking to AI for Firefly as that catalyst.
The problem is Adobe’s approach has been adopt-now, monetize-later. Given the resources and the money they’re putting into this, investors are becoming increasingly frustrated that they’re not pulling that monetization lever. What we’re wondering is, despite customers telling me and others that the products are good and that they’re using them, how much are they actually going to pay for them? And how significant of a revenue driver is this going to be in 2025?”
Adobe Inc (NASDAQ:ADBE) has become a complex case for analysts who are still gauging whether Adobe would be a net beneficiary of the AI boom or a loser. On the one hand, Adobe Inc (NASDAQ:ADBE) is under threat with tons of AI tools good enough to make beginner-level designs, posts and videos for individuals or companies with low or no marketing budget. But on the other hand, the company is launching several AI-powered tools and integrating generative AI tools in its products that could boost its revenue in the future.
Polen Focus Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) 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.”
Overall, ADBE ranks 4th on our list of stocks Wall Street analysts can’t stop talking about. While we acknowledge the potential of ADBE, our conviction lies in the belief that under the radar 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.
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Disclosure: None. This article is originally published at Insider Monkey.