Key Points Adobe turned in solid first-quarter results and once again raised its guidance. The company is benefiting from AI, which is helping fuel its revenue growth. The stock is inexpensive at current levels. 10 stocks we like better than Adobe › Despite yet another solid quarter and raised guidance, Adobe's (NASDAQ: ADBE) stock once again failed to gain much traction after earnings. The stock is down about 20% on the year, and has fallen 25% over the past five years. Let's take a close look ...

Last month, I published The Latest Thoughts From American Technology Companies On AI (2025 Q2). In it, I shared commentary in earnings conference calls for the second quarter of 2025, from the leaders of technology companies that I follow or have a vested interest in, on the topic of AI and how the technology could impact their industry and the business world writ large. A few more technology companies I’m watching hosted earnings conference calls for 2025’s second quarter after I prepared the article. The ...

1 DOUG CLARK Good afternoon and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe's Chair and CEO, David Wadhwani, President of Digital Media, Anil Chakravarthy, President of Digital Experience, and Dan Durn, Executive Vice President and CFO. On this call, which is being recorded, we will discuss Adobe's third quarter fiscal year 2025 financial results. You can find our press release, as well as PDFs of our prepared remarks and financial results, on Adobe's Investor Relations w ...

Core Insights - Adobe (ADBE) and Pegasystems (PEGA) are key players in the enterprise software sector, focusing on digital transformation through cloud-supported solutions [1] - The digital transformation market is projected to reach approximately $4 trillion by 2027, with a CAGR of 16.2% from 2022 to 2027, indicating significant growth potential for both companies [2] Adobe's Position - Adobe has enhanced its AI offerings with Adobe GenStudio and Firefly Services, facilitating collaboration on marketing campaigns [3] - Tools like Acrobat AI Assistant and Adobe Express are gaining traction among business professionals, with over 700 million monthly active users reported by the end of Q2 fiscal 2025 [5] - Adobe's Digital Media Annual Recurring Revenue (ARR) reached $18.09 billion, reflecting a 12% year-over-year increase, and its AI-first products are on track to exceed the $250 million ARR target by the end of fiscal 2025 [6] Pegasystems' Position - Pegasystems is experiencing strong demand for its AI-powered, cloud-based solutions, with the market expected to exceed $150 billion by 2029 [7] - The company's shift to a subscription-based model has driven a 14% year-over-year growth in Annual Contract Value (ACV) in Q2 2025, supported by the adoption of Pega GenAI Blueprint [8] - PEGA's capabilities include using agentic AI to modernize legacy systems, enhancing application development speed [9] Earnings Estimates - The Zacks Consensus Estimate for Adobe's fiscal 2025 earnings is $20.63 per share, indicating a 12% increase from 2024 [11] - The consensus for PEGA's 2025 earnings has risen by 5.3% to $1.98 per share, suggesting a 31.1% growth from fiscal 2024 [12] Stock Performance and Valuation - Year-to-date, Adobe shares have declined by 18.6%, while Pegasystems has seen a larger decline of 21.8% [13] - Both companies are considered overvalued, with Adobe trading at a forward Price/Sales ratio of 6.11X compared to PEGA's 5.13X [16] Investment Outlook - Adobe's focus on monetizing its AI tools positions it favorably for investors, while PEGA's valuation concerns present risks [19] - Currently, Adobe holds a Zacks Rank 2 (Buy), while Pegasystems has a Zacks Rank 3 (Hold), indicating a stronger investment case for Adobe [19]

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]

Core Viewpoint - Adobe's stock has increased by 19% in a month due to its focus on Generative AI and innovative portfolio, but faces challenges from competition and monetization issues [1][3] Company Performance - Adobe's AI business is small compared to competitors like Microsoft and Alphabet, with Microsoft benefiting from Azure AI services and Alphabet from its AI infrastructure [2] - Adobe shares have underperformed compared to Microsoft and DocuSign, which returned 24.9% and 20.9% respectively, while Adobe outperformed Alphabet's 8.2% return [3] Valuation Metrics - Adobe's stock is considered overvalued with a forward price/sales ratio of 7.28X, higher than the sector average of 6.14X and competitors like Salesforce and DocuSign [6] AI Portfolio Development - Adobe has expanded its AI offerings with products like Adobe GenStudio and Firefly Services, aimed at enhancing marketing collaboration [9] - The company plans to monetize Firefly through new Creative Cloud offerings and is integrating AI across its portfolio, which is expected to drive top-line growth [10] Financial Guidance - Adobe's AI business is projected to grow from over $125 million in Q1 FY25, expected to double by the end of FY25 [11] - For FY25, Adobe anticipates Digital Media segment revenues between $17.25 billion and $17.40 billion, with total revenue guidance between $23.30 billion and $23.55 billion [12][13] Earnings Estimates - The Zacks Consensus Estimate for FY25 earnings is $20.36 per share, reflecting a 10.53% growth over FY24, although it has seen a decline in estimates recently [14] - The estimate for Q2 FY25 earnings is $4.96 per share, suggesting a 10.71% growth from the previous year [16]

Core Viewpoint - Both Alphabet and Adobe are integrating artificial intelligence (AI) into their core offerings, with Alphabet focusing on search and cloud services, while Adobe enhances its creative products with AI capabilities [1][2]. AI Market Outlook - Global spending on AI-supporting technologies is projected to exceed $749 billion by 2028, with enterprises expected to contribute 67% of the $227 billion AI spending in 2025 [2]. Alphabet's AI Initiatives - Alphabet's AI integration in Search has seen significant growth, with Circle to Search available on 250 million devices and a 40% increase in usage during Q1 2025. Monthly visual searches have risen by 5 billion since October 2024, and AI Overview is utilized by over 1.5 billion people monthly [5][6]. - Google Cloud is becoming a preferred choice for enterprises deploying AI agents, supported by tools like the Agent Development Kit and Agent Designer [6]. Adobe's AI Developments - Adobe has expanded its AI portfolio with Adobe GenStudio and Firefly Services, aiding brands in marketing campaigns. The company has launched AI-powered features in Premiere Pro and After Effects, enhancing video and audio capabilities [9][10][11]. - Adobe's AI business was valued at over $125 million at the end of Q1 2025, representing a low single-digit percentage of total revenues of $4.23 billion, with expectations to double by the end of fiscal 2025 [12]. Earnings Estimates - The Zacks Consensus Estimate for Alphabet's 2025 earnings is $9.43 per share, reflecting an 8% increase over the past 30 days and a 17.29% rise from 2024 [13]. - Adobe's fiscal 2025 earnings estimate has slightly decreased to $20.36 per share, indicating a 10.53% growth over fiscal 2024 [14]. Performance Comparison - Both companies have consistently beaten earnings estimates, with Alphabet showing a higher average surprise of 14.64% compared to Adobe's 2.53% [15]. - In terms of valuation, Alphabet is trading at a forward Price/Sales ratio of 5.98X, lower than Adobe's 7.27X, indicating that Alphabet is relatively cheaper [16]. Conclusion - Despite regulatory challenges, Alphabet is experiencing strong growth in cloud and search services, bolstered by a dominant market position and over 270 million paid subscriptions [18]. - Adobe faces stiff competition in the AI space and struggles with monetization of its AI solutions, leading to a weaker outlook compared to Alphabet [18][19].

Core Insights - Adobe shares are currently trading at a premium with a forward 12-month price/sales ratio of 6.14X, higher than the broader Zacks Computer and Technology sector's 5.06X and competitors like Salesforce and DocuSign [1][4] - Year-to-date, Adobe shares have declined by 21.3%, influenced by tariff-related challenges, competition in the AI space, and slow monetization of AI solutions [4][8] - Adobe's AI business is significantly smaller compared to major competitors like Microsoft and Alphabet, which are experiencing growth in their AI services [8] Financial Performance - Adobe's new AI business generated over $125 million in the first quarter of fiscal 2025, representing a low single-digit percentage of total revenues of $4.23 billion [11] - For fiscal 2025, Adobe expects Digital Media segment revenues between $17.25 billion and $17.40 billion, and total revenue guidance between $23.30 billion and $23.55 billion [12][13] - The Zacks Consensus Estimate for fiscal 2025 earnings is $20.36 per share, indicating a 10.53% growth over fiscal 2024 [14] Competitive Landscape - Adobe faces stiff competition in the AI and Generative AI sectors, particularly from Microsoft and Alphabet, which are seeing significant growth in their AI-related revenues [8] - Despite the competition, Adobe has expanded its AI portfolio with new offerings like Adobe GenStudio and Firefly Services, aimed at enhancing marketing collaboration [9][10] Investment Outlook - Adobe's focus on Generative AI and innovative product offerings are seen as key growth catalysts, making it a potential long-term investment for current shareholders [15] - However, the current valuation is considered stretched, making the stock less attractive for value-oriented investors [16] - Adobe's stock is trading below its 50-day and 200-day moving averages, indicating a bearish trend [16]

These leading AI companies are some of the best stocks in tech to buy right now.One of the biggest trends driving the stock market over the last two years is artificial intelligence. Advancements in AI have the potential to change just about every industry in the world, and the technology is changing rapidly as big tech companies pour hundreds of billions of dollars into it.Investors' optimism about the possibilities unlocked by generative AI led a group of AI stocks to push the Nasdaq composite index up 43 ...

Adobe (ADBE) shares have declined 10.9% year to date (YTD), reflecting the negative impact of stiff competition in the AI and Generative AI (GenAI) space from the likes of Microsoft (MSFT) -backed OpenAI, as well as a lack of monetization of its AI solutions. The company’s new AI book of business (more than $125 million exiting first-quarter fiscal 2025) was a roughly low single-digit percentage of total revenues ($4.23 billion in the fiscal first quarter). ADBE expects this AI book of business to double by ...