We recently published a list of 12 Most Promising Growth Stocks According to Wall Street Analysts. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against other most promising growth stocks according to Wall Street analysts.
Strategist Believes the Street is Underestimating the Tech Sector
The new regulatory environment has the technology sector eyeing prominent growth opportunities in 2025 and beyond. Big Tech is set to release earnings next week and investors are excited to see how the group performed in the last quarter. On January 24, Dan Ives, managing director and global head of technology research at Wedbush Securities, appeared in an interview on Morning Brief at Yahoo Finance to share his 2025 outlook for the tech sector.
Ives suggested that the Street is underestimating the potential of Big Tech and advises investors to “grab popcorn” for the earnings week ahead. He also shared his optimism towards the billion-dollar investments made by the group before 2025 and claimed that the “fourth industrial revolution” has just begun. He also suggested that AI spending by companies heavily depends on the use cases for the company, and emphasized the unique selling point for each of the names in mega-cap tech names. Ives stated that the ability to monetize stall bases has been the crucial factor driving the growth among tech names, which happens to mimic what the hyperscalers have done.
Ives emphasized that investments in artificial intelligence are now going to play out on the consumer side and remained confident that Big Tech is a step ahead in terms of the AI journey to monetization. He believes that seeing the return on investment play out, the Street is underestimating the growth in the tech sector, not just for the earnings next week but for 2025 as a whole.
He also suggested that the regulatory environment is drastically changing especially in favor of the autonomous vehicles market and expects a massive year ahead for the segment and stocks associated with self-driving technologies and autonomous vehicle driving.
The year ahead looks super solid for companies in the growth sector, namely artificial intelligence, autonomous vehicles, biotechnology, fintech, and software. While most of it is because of the efforts made by these names over the past year, the promising regulatory environment is going to boost the position of these stocks significantly.
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. We then examined the analyst upside surrounding 25 stocks and picked the 12 stocks with the highest upside as of January 23, 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 23, 2025: 43%
Number of Hedge Fund Holders: 123
Some of Adobe Inc.’s (NASDAQ:ADBE) major products include Adobe Firefly, Adobe Express, Acrobat AI Assistant, and Adobe GenStudio. 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.
Similarly, in an exciting update, on January 22, Adobe Inc. (NASDAQ:ADBE) announced innovations to its AI tools and a $5 million investment in its Adobe Film and TV Fund to support underprivileged creators and filmmakers. Speaking of its innovations, ADBE unveiled new features in Adobe Premiere Pro, After Effects, and Frame.io to improve post-production and reduce the time spent on videos. Overall, in the fiscal fourth quarter of 2024, the company’s digital media segment grew its revenue by 12%.
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.
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 7th on our list of most promising growth stocks according to Wall Street analysts. While we acknowledge the potential of ADBE to grow, 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.
