We recently published a list of 12 Best NASDAQ Stocks To Buy in 2025. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against other best NASDAQ stocks to buy in 2025.
As 2025 began, King Lip, chief strategist and partner at BakerAvenue Wealth Management expressed his bullish outlook for tech stocks in 2025 during a CNBC interview. He underscored a strong belief in the continued outperformance of tech stocks in 2025, driven by robust earnings growth and ongoing investments in AI infrastructure. Here’s a short excerpt from our article on the 12 Best Technology Stocks to Invest In for the Long Term that covered this:
“…Lip was against the prevailing sentiment among investors that big tech has peaked and that funds should rotate into smaller stocks or other themes. He argued that the recent weakness in the tech sector is largely due to technical rebalancing rather than a fundamental downturn. He emphasized that cash is likely to flow back into leading tech stocks, as they are projected to deliver the highest earnings growth in 2025, with an anticipated earnings increase of over 20%.”
While acknowledging the high valuations of many tech stocks, he argued that they remain within acceptable historical norms. On January 9, Mark Avallone, president at Potomac Wealth Advisors, joined ‘The Exchange’ on CNBC to discuss why technology is the best sector to invest in right now. He asserts that above-target inflation will prevent the Fed from implementing further easing measures, countering the notion that higher rates are detrimental. He noted that market rates have surged to all-time highs, with a significant increase of 1,800 points since October 2023. Avallone emphasizes that tech stocks, particularly cash-flowing mega-cap and large-cap companies, have shown resilience against rising rates, attributing this to improved operational efficiencies and ongoing technology spending even in a slowing economy.
Avallone highlighted recent deal chatter in the tech sector, including Shutter Stock’s potential acquisition in the uniform space, reflecting growing interest in technology-driven solutions. He is optimistic about the incoming administration’s impact on economic efficiencies and stock performance, particularly for large-cap tech firms and mid-cap companies focused on innovation. He views Hilton favorably for its technological advancements in office management and cost efficiency. In the defense sector, he expressed confidence in Boeing’s growth potential, emphasizing that significant cuts to defense spending are unlikely and that advancements in tech will enhance military capabilities.
Methodology
We first sifted through the Finviz stock screener to compile a list of the top 20 NASDAQ for 2025. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
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)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is a global software company that is known for its creative, marketing, and document management solutions. Its flagship products include Photoshop, Illustrator, InDesign, Acrobat, and Premiere Pro. These are industry-standard tools utilized by millions of people worldwide.
In 2024, the company launched several AI models, including Firefly, which offers advanced tools for image, vector, design, and video generation. These features are integrated into core applications like Photoshop, Premiere Pro, and Acrobat. AI-driven creativity contributed to a record revenue of $21.51 billion in FY2024, reflecting an 11% increase year-over-year. Since its beta release in March 2023, Firefly has generated over 13 billion images. Recently, the platform enhanced its features to allow users to share custom models and generate videos from text prompts, with a new pricing model introduced for its AI capabilities.
Adobe Inc. (NASDAQ:ADBE) recently saw its stock decline following a 2025 revenue forecast of $23.3 to $23.55 billion, which fell short of analysts’ expectations of $23.77 billion. Investor concerns came from the potential delayed returns from the company’s investments in AI-powered software applications. The company did not provide a clear monetization strategy for its new AI tools. However, Constellation Research’s Ray Wang is bullish on Adobe Inc. (NASDAQ:ADBE) in 2025, citing the company’s strong position as an AI derivative. Wang believes that most companies will rely on established software providers like this one to use AI effectively.
Polen Focus Growth Strategy increased its holdings in the company, anticipating revenue growth which it expects Firefly to deliver. Here’s what it stated 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 8th on our list of best NASDAQ stocks to buy in 2025. While we acknowledge the growth potential of ADBE, our conviction lies in the belief that AI stocks hold great promise for delivering high 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.