5 Stocks Big Short’s Michael Burry Is Betting On

3. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 91

On April 27, Mizuho analyst Gregg Moskowitz set a target price of $270 for Adobe Inc. (NASDAQ:ADBE) and downgraded it to Neutral from Outperform. This reflects an upside of 7.9% from here on. This is a significantly bearish stance compared to JPMorgan’s $420 and Stifel Nicholas’ $400, both assigned on April 22. Analysts seem divided, and we find Michael Burry backing the bulls on this one.

As is evident from the difference in the above ratings, Gregg Moskowitz has some concerns. He is worried that Adobe consumers face competition from affordable and low-cost AI tools. Moreover, with cheaper options available for editing, users might stop using Adobe’s Creative Cloud. Moskowitz remarked,

Our conviction has weakened as we see intensifying competition in the prosumer/SMB segments threatening ADBE’s long-term terminal value, along with no clear catalyst for the stock, and a risk of margin erosion.

Additionally, Moskowitz believes that the company’s stock price won’t see any significant gain over the next 6 to 12 months, as the expected revenue growth is only 9.5% year over year. Due to high costs and the above-mentioned threats, revenue from the company’s generative AI product, Adobe Firefly, is also expected to fall. The analyst quoted:

We see a generally balanced risk/reward profile on ADBE from here, and are thus downgrading to Neutral from Outperform and lowering our PT to $270 from $315.

Adobe Inc. (NASDAQ:ADBE) is a technology company operating globally. The company operates in the Digital Media, Digital Experience, and Publishing & Advertising segments. It is based in San Jose, California, and was incorporated in 1982.