Adobe's AI Anxiety

(10min)

Summary

  • Adobe’s a “prove me” story as investors have anxiety over Generative AI competition.
  • Despite Adobe’s strong track-record and high scorecard ranking, its shares have been weak since 2021.
  • AI risk is moderate and management’s reorienting its products and pricing to maintain its strong business position.
  • Adobe’s Valuation Rating is “C”, however, EV/Revenue multiples reveal undervalued shares.

Adobe office building in San Francisco, California, USA

JHVEPhoto

Thesis:

This article focuses on Adobe (NASDAQ:ADBE) in relation to the disruptive technology of Artificial Intelligence (“AI”). First I determine if the “AI Threat” is low, medium or high. Then I examine how Adobe is reacting to the AI challenge. Lastly, I attempt to value

This article was written by

Dom received his MBA in Management and B.S. Finance (Manhattan College) and was credit trained at New York University. Dom received the Financial Risk Manager (FRM) designation from GARP.Areas of expertise are: Exponential Age & SaaS software and Blockchain.https://www.youtube.com/channel/UCdTKlxmvT0JyT4X60gI-vEw

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ADBE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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