1. Adobe Inc. (NASDAQ:ADBE)
Adobe Inc. (NASDAQ:ADBE) was among the stocks Jim Cramer shared his opinions on during Mad Money. Cramer highlighted a recent change in ratings for the stock, as he said:
Of late, and only of late, we’ve seen a remarkable move into what would’ve been considered more defensive software stocks before the advent of AI; I’m talking about Salesforce, Adobe, and yes, ServiceNow. They don’t have any shortages like tech hardware companies… By the way, Adobe was up three and a half today. Someone took it from a Hold to a Sell. You don’t get a, you know what a bottom looks like when some firm takes it to a Hold and a Sell and the stock goes up three. And I don’t really like Adobe.
Adobe Inc. (NASDAQ:ADBE) provides creative, document, and digital experience software. The company’s solutions are used to create, manage, and optimize digital content and customer experiences. Cramer discussed the company’s woes during the June 16 episode, as he commented:
A lot of this comes down to competition. At first, it was competition from other software companies, Canva, Figma, Shopify. Then, a couple of years ago, we started hearing about all these new programs from the big AI platforms, programs that have gotten very good at writing custom software… Datadog, MongoDB, Workday, they’ve all delivered some nice rebounds in response to better-than-expected earnings. That’s why I wondered if maybe, just maybe, Adobe might be able to turn things around when it reported last week. But then, even when they delivered a beat and raise quarter, the stock still got hammered…
So, what do we do with Adobe now? Honestly, I’m baffled. It’s hard to tell. On the one hand, Adobe’s down 70% from the highs… and trading at less than nine times earnings despite putting up double-digit earnings growth. Part of me feels it’s just too cheap to ignore, right? But on the other hand, Adobe’s been too cheap to ignore for a long time now, yet the stock keeps getting clubbed like a baby seal. Plus, the entire enterprise software cohort remains pretty hated on Wall Street, by the way, including today.
So, here’s the bottom line: Given the numbers, I could bring myself to recommend Adobe down here, except that we don’t know who’s going to be running the company. Maybe Adobe can turn itself around, but the stock won’t turn until we find out the next CEO and the next CFO. So please, if you want a bet on a comeback for Adobe, at least wait until you can put a face on the company’s future.
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 the cheapest AI stock.
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