UBS’ Best Stocks In The AI, Growth & Low Rates Era: Top 29 US Stocks

3. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Investors In Q2 2024: 107

UBS’ Sector Rating: Most Attractive

Sector: Information Technology

Adobe Inc. (NASDAQ:ADBE) is a global leader and brand name when it comes to productivity software products. The firm develops and sells some of the most well-known software in the world such as Photoshop and Reader. Its shares have been quite dynamic this year, with the stock dipping by 21% between January and June only to soar by 27.6% by mid-September and then sink again by 18%. As should be evident, the stock’s roller-coaster ride has been driven by artificial intelligence. Throughout the course of 2024, investors have reacted based on their perception of Adobe Inc.’s (NASDAQ:ADBE) ability to integrate AI through its product portfolio and then retain and grow subscribers based on AI to generate profits. Consequently, its latest share price dip in September which saw the shares sink by 13% came after Adobe Inc.’s (NASDAQ:ADBE) fourth-quarter midpoint EPS guidance of $4.655 and midpoint revenue of $5.25 billion fell below analyst estimates of $4.67 in EPS and $5.61 billion in revenue As a result, investors calibrated their optimism surrounding Adobe Inc.’s (NASDAQ:ADBE) AI potential.

Polen Capital mentioned Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter. Here is what the fund said:

“With Adobe, in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”