We recently compiled a list of the 12 Best Growth Stocks to Buy and Hold in 2025. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against the other growth stocks.
The Future of Rate Cuts in 2025
The latest data from the job market in the United States came out on Friday and that has made the future of rate cuts even more uncertain. Lauren Sanfilippo, senior investment strategist at Bank of America, joined Market Domination on Yahoo Finance to discuss her market thesis and how the easing cycle is expected to play out in 2025.
Sanfilippo believes that the market has been basing its decisions on the easing cycle, but the job data, which has been particularly good, has allowed investors to pivot their investment approach away from rate cuts. She added that she is not looking at more rate cuts this year and is expecting a hike amid inflation concerns. She suggested that the market must not overreact to one piece of data and wait for more data to come out before any decisions are made.
Speaking of the commencement of the easing cycle, Sanfilippo believes the Fed was in the right to start the much-awaited easing cycle. However, she did share her concerns about the 100 basis point rate cut being executed over a very short time. She added that while the job market is in good shape and inflation is not that much of a problem yet, the stock market’s performance may also be influenced because of yields and how stocks are “thinking about yields.” She also suggested that previously stocks have been very tolerant of higher yields, and is interested to see how it changes going forward.
Sanfilippo also shared her views on inflation and emphasized the importance of viewing the bigger picture more holistically. She added there is a much larger widening opportunity in the market but is waiting to see how the Q4 2024 earnings pan out.
The market may be uncertain, however, some stocks in the market have a promising outlook making them a solid buy. These stocks have been pouring into solid growth opportunities and are popular among analysts and investors. That said, let’s take a look at the 12 best growth stocks to buy and hold in 2025.
Our Methodology
We used Finviz to look for companies operating in growth sectors such as technology, financials (fintech), biotech, and communication services. We only focused on companies with a market cap of at least $2 billion and that gained more than 50% over the past 2 quarters. We then examined the analyst upside surrounding 25 stocks and picked the 12 stocks with the highest upside as of January 10, 2025. We have also included the hedge fund sentiment around each stock.
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).
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Adobe Inc. (NASDAQ:ADBE)
Analyst Upside as of January 10, 2025: 49%
Number of Hedge Fund Holders: 123
Adobe Inc (NASDAQ:ADBE) has been disrupting the generative AI industry. Some of its major products include Adobe Firefly, Adobe Express, Acrobat AI Assistant, and Adobe GenStudio. The company’s journey to becoming a GenAI giant has been prominent over the last few quarters. Earlier in 2024, Adobe Inc (NASDAQ:ADBE) launched a digital asset management system and later in the year announced the general availability of Adobe Journey Optimizer B2B Edition on its Adobe Experience Cloud.
In October 2024, Adobe Inc (NASDAQ:ADBE) launched the Firefly Video Model in beta, expanding its family of creative generative AI models, safe for commercial use. Similarly, in December 2024, the company announced a partnership with Box, Inc. to shape the way digital media is created and used. With this new integration, users will be able to create the content they need within seconds using AI.
The company holds precedence in the creative industry because of its exemplary tools and features. In addition to that, investors are particularly interested to see how its investments in AI play out in 2025 and beyond. Analysts are also bullish on the stock and their median price target implies an upside of 49% from current levels.
Polen Capital’s 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 6th on our list of the best growth stocks to buy and hold in 2025. While we acknowledge the potential of ADBE as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.
