Breaking News
Investing Pro 0
Cyber Monday Deal: Up to 55% off CLAIM SALE

Is Adobe’s AI Play Already Priced In?

By The Tokenist (Timothy Fries )Stock MarketsSep 15, 2023 21:01
ng.investing.com/analysis/is-adobes-ai-play-already-priced-in-182128
Is Adobe’s AI Play Already Priced In?
By The Tokenist (Timothy Fries )   |  Sep 15, 2023 21:01
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
ADBE
+0.65%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
+0.10%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Following an upswing on Thursday, Adobe's shares took a downturn in today’s session, declining by more than 4% despite strong Q3 earnings fueled by the company’s artificial intelligence (AI) features. The latest stock price dip poses a question of whether Adobe’s AI success is already priced in. 

Adobe Shares Tumble Despite ‘Blowout’ Third Quarter

Adobe shares tumbled 4% at the market open on Friday despite the company’s better-than-expected earnings report and upbeat guidance. 

The stock witnessed a noteworthy rally a day earlier, but the share price took a downturn in extended trading even though the company beat revenue estimates for the Q3 on robust demand for its AI-powered photo and video editing toolset. 

The maker of Photoshop has been making heavy investments to equip its creative software suite with generative AI capabilities – a burgeoning technology that took 2023 by storm. Notably, analysts expect these features to propel Adobe’s revenue growth in 2024 and the long term as more AI solutions get integrated into its products. 

Adobe CEO Dan Durn described the latest report as a “blowout quarter,” with the company’s revenue exceeding the midpoint of its previous guidance by $40 million. Durn said strong earnings data comes even though Adobe absorbed substantial generative AI computing costs related to the rollout of Firefly – its GenAI suite. Since the feature’s launch, Adobe customers have generated 2 billion images using the AI capabilities. 

Adobe’s AI Foray May Already Be Priced In

At first glance, Adobe’s Friday stock price dip may come as a surprise to some, considering that the company smashed expectations for Q3 results thanks to the ongoing AI boom. Furthermore, it offered a strong forecast for the current quarter, expecting revenue to be in the range of $4.98 billion to $5.03 billion, while analysts projected $5 billion. 

However, much of Adobe’s AI rally has already been priced in. The company’s stock is already up over 57% since the start of 2023, strongly outperforming the broader S&P 500 index, which gained 17% during that period. 

Remarkably, almost all of Adobe’s stock market gains this year came in the period between now and March, which is when the company officially introduced the AI-powered Firefly. The software maker added nearly $90 billion in market cap during these 6 months, underscoring its AI efforts’ impact on the share price.

Is Adobe’s AI Play Already Priced In?
 

Related Articles

Is Adobe’s AI Play Already Priced In?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email