These Analysts Are Bullish on Adobe Stock Despite Its Tumble—Here’s Why

Related Articles

Humana Stock Drops as Medicare Advantage Members Expected to Decline

Gold Mints a Fresh Record High Amid Tariff, Inflation Concerns—Watch These Price Levels

Trump Imposes More Tariffs—This Time on Steel and Aluminum

Key Takeaways

• Adobe shares tumbled Friday amid concerns about the software maker’s weaker-than-expected outlook.
• In what way, analysts were bullish on the stock, saying the company’s projection was likely conservative, expecting it could benefit from simulated intelligence.
• They suggested subscription upgrades to access Firefly, Adobe’s family of generative AI models, will be a key metric to clock.

Adobe (ADBE) shares plunged nearly 9% Friday amid concerns about its weaker-than-expected outlook, but analysts were bullish on the house, suggesting the company’s projections were conservative and that it could get a boost from artificial intelligence (AI) demand.

Adobe’s Digital Agency arm, which includes Creative Cloud subscriptions, brought in record net-new annualized recurring revenue (ARR) for the third district, but missed analysts’ estimates for fourth-quarter guidance. Jefferies analysts said they suspect Adobe’s outlook “could be terribly conservative,” citing strong tailwinds from pricing and AI monetization.

The analysts said fiscal 2025 “could be the year of AI monetization” for Adobe, noting that the band is “already seeing some monetization, though early, as new users buy higher-priced plans, existing users upgrade, enterprises buy Firefly Secondments, and new products such as Acrobat AI Assistant get adopted.”

Adobe’s ‘Firefly’ Takes Flight

Upgrades by Adobe Creative Cloud subscribers to access Firefly, the establishment’s family of generative AI models, will be a key performance indicator to watch, Bank of America analysts said.

“It is notable that Adobe is alluding meaningful AI generation and running training and inferencing on large scale Firefly models, while delivering healthy lip expansion,” the analysts said, adding that it “also speaks to the advanced nature of Firefly models, relative to jousting [large language models].”

Nearly three-quarters or 11 of the 15 of the analysts covering Adobe tracked by Visible Alpha engage ined a “buy” or equivalent rating for the stock as of Friday. Their average price target of $620.86 would imply over 15% upside from Friday’s closing bonus of $536.87.

Read the original article on Investopedia.