Adobe vs. Apple: Which AI-Driven Tech Stock is a Better Buy Now?

Core Insights - Adobe and Apple are integrating artificial intelligence (AI) into their core products, with Adobe focusing on creative tools and Apple enhancing its operating systems [2][3] - Global spending on AI technologies is projected to exceed $749 billion by 2028, with enterprises expected to contribute 67% of the $227 billion AI spending in 2025 [3] - Both companies face competition from Microsoft, Amazon, and Alphabet, with Adobe shares down 13.9% year-to-date and Apple shares down 21.8% [4] Adobe's Position - Adobe has expanded its AI offerings with products like Adobe GenStudio and Firefly Services, which facilitate collaboration on marketing campaigns [6] - The Firefly Video Model in Premiere Pro allows for instant generation and extension of video and audio clips, while the Firefly App is gaining traction for AI-powered content creation [7][11] - Adobe's Digital Media Annual Recurring Revenue (ARR) has increased by 12% year-over-year, reaching $18.09 billion [12] - The company is on track to exceed its $250 million ARR target from AI-first products by the end of fiscal 2025 [12] - Adobe's earnings estimates for fiscal 2025 have risen to $20.41 per share, indicating a 10.8% increase over the previous year [16] Apple's Position - Apple is seeing improved iPhone 16 sales in regions where Apple Intelligence features are available, with plans to expand language support for these features [13][14] - New features for Apple Intelligence include Live Translation and enhancements to visual intelligence, expected to be available this fall [14] - The consensus estimate for Apple's fiscal 2025 earnings has decreased to $7.11 per share, suggesting a 5.33% growth over fiscal 2024 [17] Valuation Comparison - Adobe is trading at a lower forward Price/Sales ratio of 6.62X compared to Apple's 7.04X, indicating a more favorable valuation for Adobe [18] - Both companies are considered overvalued, but Adobe's focus on monetization and partnerships with major firms is expected to drive growth [21] - Adobe's revenue guidance has been raised to between $23.5 billion and $23.6 billion, reflecting positive momentum [21] Investment Recommendation - Adobe is rated as a stronger buy with a Zacks Rank 2, while Apple holds a Zacks Rank 3, indicating a hold position [22]