6. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders as of Q4: 117
Fisher Asset Management’s Equity Stake: $2.15 Billion
Upside Potential as of April 30: 36.99%
Adobe Inc. (NASDAQ:ADBE) is a prominent American software company headquartered in San Jose, California. Renowned for its diverse portfolio of creative and digital solutions, Adobe offers a wide range of software tools for photo and video editing, vector graphics, web and print design, animation, mobile app development, and audio production. The company continues to set industry standards with its Creative Cloud suite, while also pushing boundaries in artificial intelligence and generative media.
For the first quarter of fiscal year 2025, Adobe Inc. (NASDAQ:ADBE) delivered record-breaking results, achieving revenue of $5.71 billion, a 10% year-over-year increase. The company reported GAAP diluted earnings per share of $4.14 and while operating income reached $2.16 billion. Net income was $1.81 billion. Adobe also reported strong cash flows from operations totaling $2.48 billion, and closed the quarter with Remaining Performance Obligations (RPO) of $19.69 billion, with Current RPO (cRPO) representing 67%. Additionally, the company repurchased approximately 7 million shares during the quarter, highlighting its ongoing commitment to returning value to shareholders.
Adobe Inc. (NASDAQ:ADBE) also made major strides in the field of generative AI with the launch of several new tools and upgrades to its Firefly platform. The company introduced the Firefly Image Model 4, which offers improvements in image quality, speed, and creative control, including camera angles, zoom, and stylistic precision. The model can generate high-resolution images up to 2K and has a more advanced variant, Image Model 4 Ultra, capable of rendering intricate scenes with detailed structures. These advancements are a result of significantly increased computational training, allowing for more nuanced and stylistically accurate image generation. Adobe’s generative capabilities are further enhanced by its Firefly Video Model, now publicly available after a limited beta. This tool enables users to generate 1080p video clips from text or images, customize motion elements, and manipulate shot composition and atmospheric details.
With strong financials, innovative AI tools, and strategic investments in content authenticity and generative technology, Adobe is well-positioned to maintain its leadership in creative software while expanding its influence in the rapidly evolving AI landscape. It currently has an upside potential of 36.99%, making it sixth on the list of billionaire Ken Fisher’s technology stock picks with huge upside potential.
Aristotle Value Equity Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q1 2025 investor letter:
“Adobe Inc. (NASDAQ:ADBE), the leading provider of content creation and publishing software, was a notable detractor during the quarter. This came despite the company reporting record revenue of over $5.7 billion in the first quarter—a 10% year-over-year increase, with double-digit increases across both its Digital Media and Digital Experience segments. The disconnect between strong fundamentals and share price weakness reflects ongoing market concerns around intensifying competitive threats from generative AI and lower-cost design platforms. Market sentiment has remained cautious around the perceived disruption risk posed by new AI-driven entrants, including OpenAI’s Sora for video generation and platforms like Canva, which cater to the broader prosumer and small and medium-sized business segment. However, we continue to view these as largely non-overlapping with Adobe’s core base of creative professionals, enterprises and agencies—audiences that demand precision, control and integration within larger workflows. Canva, while expanding its feature set, remains limited in its enterprise readiness and depth. Sora, meanwhile, remains early-stage and experimental, with limited commercial application at this point. Crucially, Adobe is not standing still. The company is actively embedding generative AI across its ecosystem through Firefly, which is commercially safe (i.e., free of copyrighted sources to train its models) and integrated natively into Creative Cloud applications like Photoshop and Illustrator. Firefly has shown strong early traction, generating $125 million in annualized recurring revenue, with management expecting that figure to double by year end. While modest in size relative to Adobe’s total revenue, Firefly’s monetization strategy is still in its early innings, with further potential through upselling, usage-based pricing and expanded use cases. Beyond monetization, AI integration enhances Adobe’s long-term competitive moat through product functionality, stronger customer engagement and increased switching costs. Adobe’s unique access to proprietary data, content workflows and creative content allows it to fine-tune models that serve the high-end needs of professionals—capabilities that generic AI models lack. Strategic partnerships with Microsoft (e.g., Firefly in Microsoft 365 Copilot) and ongoing momentum in Adobe Express further extend its reach into new user segments. Ultimately, we believe Adobe has a durable competitive advantage, underpinned by a large installed base, subscription-led business model, strong brand equity and a long track record of innovation. While short-term concerns over AI disruption have weighed on the stock price, we believe Adobe is well-positioned to harness AI as a driver of value rather than being displaced by it.”
