Adobe (ADBE) Positions Itself as an AI "One-Stop Shop" - Analysts Remain Bullish

Adobe Inc. (NASDAQ:ADBE) is one of the  AI Stocks in the Spotlight This Week. On October 30, Barclays analyst Saket Kalia reiterated an Overweight rating on the stock with a $465.00 price target.

The firm sees AI momentum and ARR growth as key value drivers for the company despite accounting shift concerns.

Barclays highlighted three key takeaways from Adobe’s MAX user conference and analyst Q&A. One of these takeaways is how the company is striving to be a “one stop shop” for creative design by bringing in outside models.

Despite broader concerns about the impacts of generative AI, the company is experiencing growth in seats/content creation.

Adobe is also transitioning toward a Total ARR reporting/guidance framework, which is a concern that may be met with scepticism. However, analysts believe that continued double digit growth will serve as a real value driver for the company.

Finally, Adobe’s conversational experiences may increase costs initially, the analysts noted. However, they will likely decrease opex spend used for training over time.

“Three key takeaways from Adobe’s MAX user conference and analyst Q&A: (1) ADBE’s strategy for AI is to aggregate third party models for the customer to use Adobe as the ‘one-stop-shop’ for creative design, and it sounds like the company is seeing ‘unambiguous’ growth in seats/content creation despite the fear of headwinds from Gen AI; (2) Adobe will be moving to a Total ARR reporting/guidance framework, which marks the second change in as many years for financial disclosure and will likely be met with skepticism, but we think that it is more important that the customer groupings should continue to grow double digits, which is the real driver of value for the company; and (3) we discuss the conversational experiences Adobe announced at the opening keynote and that while third-party inferencing may drive costs higher, this should alleviate some opex spend used for training.”

Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions.

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