Adobe’s (ADBE) Strength in AI-Enhanced Creative Tools Undervalued by Market, Analysts Say

Adobe Inc. (NASDAQ:ADBE) is one of the best large-cap tech stocks to buy now. The company’s shares have lost around 23% so far this year, making it the second weakest stock on this list of large-cap stocks. It recently reported its Q2 results and gave out guidance for the third quarter, which was seen as weaker than expectations. The weaker performance is now generally being attributed to rising competition from newer AI tools such as those from Canva or Midjourney.

On the pessimism towards the company, DA Davidson’s Gil Luria, in a mid-June Bloomberg interview, said that he believes the market underestimates Adobe’s position, wrongly labelling it as an “AI loser.” While AI can automate content creation, Adobe’s real strength lies in the tools such as those used for collaboration, editing, and publishing, and they remain critical for creative professionals. He believes this positions Adobe to benefit from AI adoption while further reinforcing its competitive moat.

Adobe’s latest results and outlook remain solid, and Luria sees its AI strategy as a meaningful growth driver. The company is integrating generative AI into its Creative Suite to enhance core capabilities in image and video creation, while also enabling customers to use leading third-party AI models from providers like OpenAI, MidJourney, and Google.

And it’s not just Luria, portfolio managers at Diamond Hill Capital also expressed a positive view on Adobe in their Q2 2025 “Large Cap Fund” investor letter. They noted that while the market appears focused on potential competitive pressures and AI-related disruption, these risks are already factored into the current valuation. Citing Adobe’s broad and diversified product portfolio, strong market position, and recent AI integration across its offerings, they expect the company to maintain healthy fundamentals in the coming years. Seeing the stock trading at a discount to their intrinsic value estimate, they initiated a position during the quarter.

Adobe Inc. (NASDAQ:ADBE) is a global leader in creative, document, and digital experience software, providing tools for content creation, design, marketing, analytics, and customer engagement.

While we acknowledge the potential of ADBE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ADBE and that has 100x upside potential, check out our report about this cheapest AI stock.

READ NEXT: 13 Best Defensive Stocks to Invest in According to Analysts and 10 Most Oversold Semiconductor Stocks So Far in 2025.

Disclosure: None. This article is originally published at Insider Monkey.