We recently published a list of Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. Since Adobe Inc. (NASDAQ:ADBE) ranks 5th on the list, it deserves a deeper look.
Stanley Druckenmiller is one of the few billionaires who have been bullish on the AI megatrends right from the start. But that doesn’t mean he’d buy just anything AI the market is buying. After making huge profits from his bullish bet on Jensen Huang’s AI chips empire, he started cashing out of the company in the first quarter and by the end of the June quarter, his stake in the company was left at just over 200,000 shares.
Back in May, Druckenmiller explained why he’s selling the hottest AI stock, saying he’s had a “hell of a run” and he now “just needs a break.”
However, the billionaire said at the time that AI remains underhyped in the long term. Stanley Druckenmiller compared the internet revolution with the current AI boom, saying AI could “rhythm” with the internet and the real payoffs will come 4-5 years from now on. The Duquesne Capital founder, who closed his fund for outside investors and turned it into a family officer in 2011, said that the “incremental payoff” of AI investments is coming by the “day.”
During the second quarter, Druckenmiller shook up his portfolio to buy and sell several famous as well as under-the-radar AI stocks. In this article, we will take a look at some of those.
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Adobe Inc (NASDAQ:ADBE)
Billionaire Stanley Druckenmiller’s Stake Value: $20,380,000 (New Stake)
Adobe has crushed all market fears around generative AI potentially denting the demand for company products. Some believed the rise of generative AI tools would dampen the demand for Adobe’s tools since everyone can now just give simple text-based commands to AI to make images and edit videos. But Adobe turned the tables around and used AI to its advantage. Adobe Inc (NASDAQ:ADBE) Digital Experience segment is integrating AI tools to enhance its tools and deliver AI-driven features for automation and personalization, catering to marketers, advertisers, ad agencies, publishers, and business executives. Through Adobe Experience Cloud, it offers solutions for B2B marketing and content creation.
A new addition to this segment is Adobe GenStudio, a generative AI product designed for marketing. It creates AI-generated images and supports content planning and management. Despite its content creation features, Adobe Inc (NASDAQ:ADBE) classified GenStudio under Digital Experience due to its primary focus on marketing applications.
After the Q2 results more Wall Street analysts think Adobe is in a position to use the generative AI revolution to its advantage. For the third quarter, the company expects $5.38 billion in revenue for Q3, marking a 12.1% year-over-year growth and signaling sequential acceleration.
Growth at Adobe Inc (NASDAQ:ADBE) is aided by AI products like Firefly, which has not only attracted new users but also boosted retention rates.
JPMorgan has upgraded Adobe Inc (NASDAQ:ADBE) to Overweight from Neutral and raised its price target to $580 from $570. Analysts believe the stock has significant upside potential and is poised to recover to its previous highs, potentially outperforming the broader market. They think current investor concerns, particularly around the Firefly product, might be overblown, and that monetization could start to improve in the latter half of this year and into the next.
Polen Global Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
Overall, Adobe Inc. (NASDAQ:ADBE) ranks 5th on Insider Monkey’s list titled Billionaire Stanley Druckenmiller is Buying and Selling These 10 AI Stocks. While we acknowledge the potential of Adobe Inc. (NASDAQ: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.
