Goldman Sachs’ Stocks With Highest Consensus Returns: 42 Stocks With The Highest Consensus ROE

37. Adobe Inc. (NASDAQ:ADBE)

Consensus ROE: 6%

Number of Hedge Fund Investors in Q2 2024: 107

Adobe Inc. (NASDAQ:ADBE) is a software company that is one of the most well known firms of its kind. It offers productivity software and tools such as image editing and document reading products. Adobe Inc. (NASDAQ:ADBE)’s brand name coupled with its business model enables it to earn high margin revenue and beef up sales through subscription revenue. Consequently, the firm’s hypothesis depends on the broader business environment, with heightened economic activity leading to greater subscriptions. Adobe Inc. (NASDAQ:ADBE) also benefits from being able to target AI products and services. These have driven its narrative in 2024, with the stock tumbling by 30% between February and May after investors were unconvinced about Adobe Inc. (NASDAQ:ADBE)’s ability to introduce AI into its products. Since then, the shares are up by 11% after the company introduced AI tools such as Firefly and AI Assistant. Yet, Adobe Inc. (NASDAQ:ADBE)’s shares fell by 9% in September after its midpoint Q4 guidance of $5.25 billion missed Wall Street estimates by $5.61 billion – indicating that high growth and nothing else is driving investor sentiment.

Polen Capital mentioned Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter. Here is what the fund said:

“With Adobe, 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.”