📉 Adobe - strong results, but shares fall on AI concerns!
Adobe $ADBE is a global leader in creative software used by millions of professionals in graphic design, digital marketing, video production and document management.
Key products include:
🎨Adobe Creative Cloud - Photoshop, Illustrator, Premiere Pro, After Effects, InDesign and other tools for creatives.
📊 Adobe Experience Cloud - Analytics, digital marketing and AI-driven personalization for businesses.
📄 Adobe Document Cloud - Acrobat, PDF tools and e-signatures via Adobe Sign.
📊 Important Numbers: Strong results beyond expectations
Revenue: $5.71 billion (vs. expectations of $5.66 billion) 📈
Adjusted earnings per share (EPS): $5.08 (vs. expectations of $4.97)
Outlook for the next quarter: $4.95-5.00 EPS on revenue of $5.77-5.82 billion
Although the numbers beat expectations, the stock is down more than 13 % on growing concerns that Adobe is losing its lead in artificial intelligence (AI).
📌 Worrying AI strategy
Adobe has long been a dominant force in creative software, but with the rise of generative AI, new and cheaper players like OpenAI are emerging (DALL-E), Canva, Affinity Designer , and startups using AI models to create graphics and videos.
While Adobe has integrated AI into its products (Firefly AI in Photoshop, Generative Fill, AI in Adobe Premiere Pro), The company expects to double that amount by the end of the year, but it's still a small fraction compared to overall revenue.
📢 Adobe CEO Shantanu Narayen: "Not only are we bringing AI into our products, but we're also creating new revenue streams."
📈 Long-term outlook
WhileAdobe still dominates its segment, its tools are used by millions of professionals, businesses and marketers around the world. But its unrivaled popularity is rapidly declining.
For 2025, the company expects earnings of $20.20-20.50 per share on revenue of $23.3-23.55 billion, suggesting 9% growth.
What's your take on this company? Does anyone use any products from this company, or do you prefer to rely on (cheaper) alternatives?
That AI may be a problem for the company, but if they adapt a bit and improve their strategy, they could be around for a long time.
I'm not very interested in this company and I also have the aforementioned $AMZN and $GOOG in my portfolio.
After the results, the stock fell solidly and the valuation is already quite interesting, but the question is whether the company will succeed in the AI boom.
Adobe has an interesting business, but the closest I have to it is in the $AMZN and $GOOG portfolios.