Jefferies’ Top Crowded Software Long Positions: Top 10 Stocks

3. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders In Q2 2024: 107

Shares Short % Of Outstanding: 1.48%

Adobe Inc. (NASDAQ:ADBE) is one of the biggest productivity software providers in the world. It offers a wide variety of products such as those used in image editing, document management, and marketing. The age of AI has been great for Adobe Inc. (NASDAQ:ADBE), as AI expands the services that it can offer to customers. However, the stock has struggled in 2024 with the shares down by 14%. Adobe Inc. (NASDAQ:ADBE)’s 2024 stock performance is bifurcated into two halves, and the poor performance has been driven by the first half. This saw the shares tumble by 30% between February and May as investors remained unconvinced of Adobe Inc. (NASDAQ:ADBE)’s ability to leverage AI to retain or grow its market share. These two factors are key to its hypothesis which depends on the firm’s ability to earn through subscription revenues. However, the second half of Adobe Inc.’s (NASDAQ:ADBE) stock performance has been kind to investors as the shares are up by 13.4%. Growth is still a key tenet of the hypothesis, with the stock tumbling by 9% in September after Adobe Inc. (NASDAQ:ADBE)’s Q4 midpoint revenue guidance of $5.25 billion missed analyst estimates of $5.61 billion.

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.”