We recently compiled a list of the 10 AI News Investors Shouldn’t Miss. In this article, we are going to take a look at where Adobe Inc. (NASDAQ:ADBE) stands against the other AI stocks.
Angie Newman from UBS Private Wealth Management discussed how to take advantage of the ongoing artificial intelligence boom on CNBC’s Squawk Box Asia. Discussing the macroeconomic environment, Newman stated how the correlation between stocks and bonds often increases during geopolitical uncertainty and fluctuating interest rates.
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While investors may think that balancing stocks and bonds will make their portfolio well diversified and they would be able to create smooth returns over time, it’s not always the case. To address this, Newman recommends incorporating other alternative asset classes like gold. Investors can particularly focus on sectors such as data centers, which are poised to benefit significantly from AI advancements.
She noted that AI’s impact extends beyond tech companies producing AI components, highlighting data centers and established value companies integrating the technology. Newman also stressed the importance of adopting an equal-weight portfolio strategy and rebalancing regularly to capture opportunities across AI beneficiaries.
Heading into 2025, the frenzy around artificial intelligence and its vast potential show no signs of slowing down. Even business executives and researchers anticipate that autonomous “agents” and profitability are likely to dominate the artificial intelligence agenda next year. Speaking at the Reuters NEXT conference in New York, the executives explained how agents, or systems that can perform actions without direct involvement have long been an intangible goal for researchers. However, the capabilities were likely to be enabled by step-by-step reasoning approaches like those used in OpenAI’s o1 model.
“I think we are going to see a lot of motion next year around agents, and I think people are going to be surprised at how fast this technology comes at us. We think that’s just the beginning of what 2025 will be about: agents who are really there to help you with day to day tasks”.
– OpenAI CFO Sarah Friar.
Sarah Friar, CFO of OpenAI, anticipates that Artificial General Intelligence, a theoretical AI system with capabilities rivaling a human’s, will be developed in the next few years. Analysts and venture capitalists are already very bullish on 2025, stating that it is going to be “a year of profitability”. Moreover, companies have already moved beyond the stage of experimentation, having integrated AI technology into their operations. Businesses are benefiting from integrating AI by streamlining operations, enhancing decision-making, and driving innovation for increased efficiency and profitability.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 123
Adobe Inc. (NASDAQ:ADBE) is a software company that provides digital marketing and media solutions. On December 12, UBS analyst Karl Keirstead maintained a “Hold” rating on Adobe and set a price target of $525.00. Keirstead has given the hold rating due to the modest outlook for Adobe’s stock performance. One factor that the analyst noted is the projected growth rates for Adobe’s Digital Media revenue and annual recurring revenue (ARR) in FY25, demonstrating limited upside from artificial intelligence. This has been a key focal point for investors.
Moreover, growth momentum also looks challenged as evidenced by recent growth in new ARR for its Creative segment (which fell short). Adobe’s plans on making money from artificial intelligence by introducing specific new product tiers, instead of increasing prices across all products, hasn’t met investor expectations either. Consequently, the company’s valuation multiples appear high due to its growth profile and slow AI monetization. The lower price target by the analyst reflects all these considerations and a hold stance will be maintained until clearer signs of AI-driven growth materialize.
Overall, ADBE ranks 1st on our list of AI news investors shouldn’t miss. While we acknowledge the potential of ADBE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ADBE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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