Cramer has discussed productivity software Adobe Inc. (NASDAQ:ADBE) several times over the past couple of months. Some of the factors that have crossed his mind include the impact on the firm’s products from Apple and its software-as-a-service business model. The shares gained 7% between August 17th and August 19th. Cramer discussed the share price movement on August 24th:
“You’re absolutely right, even Adobe rallies. And Adobe [inaudible] thought to be destroyed by Figma and Canva. so you’ve got a shift, to enterprise software. You have a belief that I just want to stay away from anything data center, which is just too hard.
“But Adobe was down 30 now it’s down 21%. So do you buy Adobe? Don’t you care about the quality of earnings of Adobe? Don’t you care that they have no CEO and no CFO? Because people obviously haven’t because this stock is now going from 190 to 270.”
Like other pre-AI software company, the narrative for Adobe Inc. (NASDAQ:ADBE) also surrounds the impact of the new technology on its business. On this front, while the firm’s earnings report, which was released in mid-June might be stale, it did share important figures. During the second fiscal quarter, Adobe Inc. (NASDAQ:ADBE) reported more than $500 million in ‘AI-first’ annual recurring revenue (ARR). The firm outlined that its Firefly platform, which is an AI creative studio, was closing in on $300 millioo in ARR courtesy of 50% annual growth. As a whole, Adobe Inc. (NASDAQ:ADBE) reported $27.1 billion in ARR.
On the other hand, while the firm might be generating AI tailwinds, it cut its organic ARR guidance to 10% from the mid-teens which indicated that problems with its non-AI business have stuck. Additionally, Adobe Inc. (NASDAQ:ADBE)’s reliance on the seat-based business model sits smack in the middle of bearish fears of an industry-wide shift. The firm is also losing its pricing edge with products such as Creative Cloud, which further pressurizes its margins. Consequently, events such as a Firefly ARR acceleration and new product launches could create tailwinds for the firm.
During Q2 2026, 81 out of the 1,006 hedge funds part of Insider Monkey’s database had held a stake in Adobe Inc. (NASDAQ:ADBE), which marked a drop over the 86 out of 1,022 funds covered in Q1. A notable jump came from Citadel Investment Group as it bumped up its stake by 249% to $178 million, while Chilton Investment Company, Two Sigma Advisors and Tudor Investment Corp exited their stakes. Adobe Inc. (NASDAQ:ADBE)’s forward P/E of 10 is significantly lower than its historical average while short interest as a percentage of float is 5%.
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Disclosure: None.
