Guinness Global Innovators, an investment management company, released its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund generated a total return of 21.9% (TR in GBP) in 2024, compared to the MSCI World Net TR Index return of 20.8%. 2024 turned out to be yet another successful year for stocks. For the first time since the 1990s, the S&P 500 has now produced two years in a row with returns of more than 20% (USD). Against a complex backdrop of shifting monetary policy, geopolitical instability, and disparate regional economic performance, global equities markets produced strong returns. To get an idea of the fund’s best choices for 2024, check out its top 5 positions.
In its fourth quarter 2024 investor letter, Guinness Global Innovators 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 -12.86%, and its shares lost 23.65% of their value over the last 52 weeks. On March 21, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $387.26 per share with a market capitalization of $168.418 billion.
Guinness Global Innovators stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q4 2024 investor letter:
“Adobe Inc. (NASDAQ:ADBE) faced challenges this year, ending as the Fund’s worst-performing stock (-25.5% USD). Investor concerns about Adobe’s AI strategy and underwhelming earnings reports played a key role in performance over the year. Adobe started the year with optimism surrounding its generative AI innovations and the company seemed poised to capitalize on the surging demand for creative and marketing automation tools. Its AI-driven platform, Firefly, launched in March 2023, quickly gained traction, generating over 16 billion creative outputs and setting adoption records. However, despite this strength, Adobe’s stock has underperformed, as earnings reports over the year have appeared softer than initially expected from investors. The market reaction however was not caused by scepticism about Adobe’s AI products and tools, but rather driven by concerns on the ability to monetise these quickly. The creative design market has seen intensifying competition with competitors like OpenAI, Canva and even startups introducing generative AI content tools such as text-to-video tools. Adobe’s strategy has appeared to be focused on prioritising widespread adoption over immediate monetization, echoing its successful strategy with PDF in previous years. While larger enterprises have adopted and appreciate Adobe’s ‘commercially safe’ tools compared to peers, Adobe sees a large opportunity amongst those that were not traditionally users of the Adobe’s tools, whether enterprise employees or non-enterprise customers and have thus chosen to drive proliferation of their tools in these ‘untapped’ consumers and delay monetisation. Whilst some AI tools have missed revenue expectations through the year, the increased proliferation and the increasing costs of creating content should improve Adobe’s prospects of monetisation into FY25. Further, despite these short-term challenges, Adobe has a track record of high-quality attributes and long-term growth prospects. Its extensive distribution network, and loyal customer base provide it with a durable competitive edge. The company’s subscription-based model, which accounts for over 90% of its revenue, ensures stable cash flows and high margins. Finally, its brand equity as the industry standard in creative and document solutions supports ongoing market leadership, allowing us to remain confident in Adobe’s ability to navigate current challenges and deliver sustained value over time.”
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 high-flying AI stocks this week. 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.