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Analysts See New AI Opportunities for Adobe Inc (NYSE:ADBE)

We recently published a list of 11 Biggest AI and Tech Stock Analyst Upgrades and Downgrades in July So FarSince Adobe Inc (NYSE:ADBE) ranks 6th on the list, it deserves a deeper look.

As soon as the latest softer-than-expected inflation data numbers were out, investors began to take profits from major tech stocks and pour money into small-cap companies amid hopes of rate cuts. However, some were quick to call the latest decline in tech stocks the end of the AI-fueled rally that has pushed stock valuations to eye-popping levels. But there are some Wall Street analysts who believe this is just a short-term trend and large tech and AI stocks have a lot of room to grow. Samantha McLemore, CIO of Patient Capital, said while talking to CNBC that the “bull market continues and the path of least resistance is higher.”

The analyst said that she has been in the market for a long time and investors have been worrying about the end of the bull market since 2009, while the S&P 500 has grown over 1000% (17% per year) since then.

“We don’t see any end to the bull market. We do think there’s a good chance we see a rotation and small caps, the laggards, do much better in the second half of the year as the Fed starts to cut rates.”

Some analysts believe the latest decline in tech stocks is yet another opportunity for long-term investors to pile into AI stocks for gains. In this backdrop, we decided to take a look at the top AI stock upgrades and downgrades this month. 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).

Adobe Inc (NASDAQ:ADBE)

Number of Hedge Fund Investors: 108

Earlier this month Deutsche Bank added Adobe Inc (NASDAQ:ADBE) to its Fresh Money list and gave the stock bullish comments amid AI catalysts.

Deutsche Bank believes the company’s creative cloud division is expected to grow along with generative AI products kicking in.

 “We believe this creates an opportunity to see positive estimate revisions along with multiple expansion as the narrative flips to Adobe Inc (NASDAQ:ADBE)  once again a gen AI beneficiary.”

The firm raised its price target on the stock to $650.

Mizuho analyst Gregg Moskowitz also said in a fresh note that the “breadth of” AI monetization of Adobe Inc (NASDAQ:ADBE)  is being “underappreciated” by the market.

Adobe shares rose after the company posted a strong Q2, putting an end to skeptics’ narrative which said the company’s editing tools were under threat from the generative AI revolution. JPMorgan upgraded the stock to Overweight from Neutral after the Q2 results and upped its price target to $580 from $570.

Previously, the stock suffered as several analysts voiced their doubts about Adobe’s growth in the AI era. Melius Research downgraded Adobe Inc (NYSE:ADBE) stock to Hold from Buy with a $510 price target, citing broader issues the enterprise software industry is experiencing when it comes to AI. Melius analyst Ben Reitzes said these issues are similar to the ones on-premise hardware companies experienced following the rise of Cloud computing. The analyst also said that AI is making it easier for smaller companies to develop and deploy tools, increasing competition to bigger players in the industry.

Adobe Inc (NYSE:ADBE) shares have lost about 4% so far this year. The notion that the rise of generative AI tools would give tough competition to Adobe Inc’s (NYSE:ADBE) design tools is weighing down the stock.

Adobe Inc (NYSE:ADBE) management sensed the worries among investors stemming from fears the generative AI boom would cut the demand of Adobe products. Adobe Inc’s (NYSE:ADBE) management believes the AI boom would only increase the need of its editing tools since text-to-image content cannot be used in isolation and needs editing. Here’s the management’s take on why it believes Adobe Inc (NYSE:ADBE) has no threats in the AI arms race:

“Every creator and business is focused on building their brand and engaging with their audiences through standout content. Creative Cloud remains the solution of choice for the world’s creators, whether their medium is design, photography, video, illustration or 3D. Adobe Express is inspiring millions of users of all skill levels to design more quickly and easily than ever before. In the year since we announced and released Adobe Firefly, our creative generative AI model, we have aggressively integrated this functionality into both our Creative Cloud flagship applications and more recently, Adobe Express, delighting millions of users who have generated over $6.5 billion assets to date. In addition to creating proprietary foundation models, Firefly includes a web-based interface for ideation and rapid prototyping, which has seen tremendous adoption.

We also recently introduced Firefly Services, an AI platform which enables every enterprise to embed and extend our technology into their creative, production and marketing workflows.”

Read the full earnings call transcript here.

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.”

Overall, Adobe Inc (NYSE:ADBE) ranks 6th on Insider Monkey’s list titled 11 Biggest AI and Tech Stock Analyst Upgrades and Downgrades in July So Far. While we acknowledge the potential of Adobe Inc (NYSE:ADBE), 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 more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal!

AI is eating the world—and the machines behind it are ravenous.

Each ChatGPT query, each model update, each robotic breakthrough consumes massive amounts of energy. In fact, AI is already pushing global power grids to the brink.

Wall Street is pouring hundreds of billions into artificial intelligence—training smarter chatbots, automating industries, and building the digital future. But there’s one urgent question few are asking:

Where will all of that energy come from?

AI is the most electricity-hungry technology ever invented. Each data center powering large language models like ChatGPT consumes as much energy as a small city. And it’s about to get worse.

Even Sam Altman, the founder of OpenAI, issued a stark warning:

“The future of AI depends on an energy breakthrough.”

Elon Musk was even more blunt:

“AI will run out of electricity by next year.”

As the world chases faster, smarter machines, a hidden crisis is emerging behind the scenes. Power grids are strained. Electricity prices are rising. Utilities are scrambling to expand capacity.

And that’s where the real opportunity lies…

One little-known company—almost entirely overlooked by most AI investors—could be the ultimate backdoor play. It’s not a chipmaker. It’s not a cloud platform. But it might be the most important AI stock in the US owns critical energy infrastructure assets positioned to feed the coming AI energy spike.

As demand from AI data centers explodes, this company is gearing up to profit from the most valuable commodity in the digital age: electricity.

The “Toll Booth” Operator of the AI Energy Boom

  • It owns critical nuclear energy infrastructure assets, positioning it at the heart of America’s next-generation power strategy.
  • It’s one of the only global companies capable of executing large-scale, complex EPC (engineering, procurement, and construction) projects across oil, gas, renewable fuels, and industrial infrastructure.
  • It plays a pivotal role in U.S. LNG exportation—a sector about to explode under President Trump’s renewed “America First” energy doctrine.

Trump has made it clear: Europe and U.S. allies must buy American LNG.

And our company sits in the toll booth—collecting fees on every drop exported.

But that’s not all…

As Trump’s proposed tariffs push American manufacturers to bring their operations back home, this company will be first in line to rebuild, retrofit, and reengineer those facilities.

AI. Energy. Tariffs. Onshoring. This One Company Ties It All Together.

While the world is distracted by flashy AI tickers, a few smart investors are quietly scooping up shares of the one company powering it all from behind the scenes.

AI needs energy. Energy needs infrastructure.

And infrastructure needs a builder with experience, scale, and execution.

This company has its finger in every pie—and Wall Street is just starting to notice.

Wall Street is noticing this company also because it is quietly riding all of these tailwinds—without the sky-high valuation.

While most energy and utility firms are buried under mountains of debt and coughing up hefty interest payments just to appease bondholders…

This company is completely debt-free.

In fact, it’s sitting on a war chest of cash—equal to nearly one-third of its entire market cap.

It also owns a huge equity stake in another red-hot AI play, giving investors indirect exposure to multiple AI growth engines without paying a premium.

And here’s what the smart money has started whispering…

The Hedge Fund Secret That’s Starting to Leak Out

This stock is so off-the-radar, so absurdly undervalued, that some of the most secretive hedge fund managers in the world have begun pitching it at closed-door investment summits.

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Why? Because excluding cash and investments, this company is trading at less than 7 times earnings.

And that’s for a business tied to:

  • The AI infrastructure supercycle
  • The onshoring boom driven by Trump-era tariffs
  • A surge in U.S. LNG exports
  • And a unique footprint in nuclear energy—the future of clean, reliable power

You simply won’t find another AI and energy stock this cheap… with this much upside.

This isn’t a hype stock. It’s not riding on hope.

It’s delivering real cash flows, owns critical infrastructure, and holds stakes in other major growth stories.

This is your chance to get in before the rockets take off!

Disruption is the New Name of the Game: Let’s face it, complacency breeds stagnation.

AI is the ultimate disruptor, and it’s shaking the foundations of traditional industries.

The companies that embrace AI will thrive, while the dinosaurs clinging to outdated methods will be left in the dust.

As an investor, you want to be on the side of the winners, and AI is the winning ticket.

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A New Dawn is Coming to U.S. Stocks

I work for one of the largest independent financial publishers in the world – representing over 1 million people in 148 countries.

We’re independently funding today’s broadcast to address something on the mind of every investor in America right now…

Should I put my money in Artificial Intelligence?

Here to answer that for us… and give away his No. 1 free AI recommendation… is 50-year Wall Street titan, Marc Chaikin.

Marc’s been a trader, stockbroker, and analyst. He was the head of the options department at a major brokerage firm and is a sought-after expert for CNBC, Fox Business, Barron’s, and Yahoo! Finance…

But what Marc’s most known for is his award-winning stock-rating system. Which determines whether a stock could shoot sky-high in the next three to six months… or come crashing down.

That’s why Marc’s work appears in every Bloomberg and Reuters terminal on the planet…

And is still used by hundreds of banks, hedge funds, and brokerages to track the billions of dollars flowing in and out of stocks each day.

He’s used this system to survive nine bear markets… create three new indices for the Nasdaq… and even predict the brutal bear market of 2022, 90 days in advance.

Click to continue reading…