What Makes Adobe (ADBE) an Investment Bet?

Diamond Hill Capital, an investment management company, released its “Select Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets continued their YTD rally in the third quarter, with the Russell 3000 Index surging 8%. At the same time, the portfolio underperformed the Russell 3000 Index, returning 4.98%. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its third-quarter 2025 investor letter, Diamond Hill Select Fund highlighted stocks such as Adobe Inc. (NASDAQ:ADBE). Adobe Inc. (NASDAQ:ADBE) is a technology company that operates through Digital Media, Digital Experience, and Publishing and Advertising. The one-month return of Adobe Inc. (NASDAQ:ADBE) was -2.56%, and its shares lost 30.02% of their value over the last 52 weeks. On October 29, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $337.86 per share, with a market capitalization of $141.428 billion.

Diamond Hill Select Fund stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its third quarter 2025 investor letter:

“Though markets have continued rising throughout the year, we have continued finding individual companies whose prices we believe are not reflective of their long-term growth outlooks. Accordingly, we initiated four new positions in Q3, including Colgate-Palmolive, Berkshire Hathaway, Zoetis and Adobe Inc. (NASDAQ:ADBE).

Adobe is the market’s largest provider of creative content software and enjoys a sizeable moat. Design professionals in all verticals — graphic designers, video editors, web and mobile app creators, etc. — rely heavily on Adobe’s robust suite of tools. It also owns direct customer engagement software and the ubiquitous Adobe Acrobat platform, two assets we think are underappreciated by the market. Despite valid concerns about greater competition and AI disruption going forward, we think Adobe’s solution breadth and diversification, incumbency and strong positioning upmarket, as well as its ongoing willingness to innovate, should position it well to weather shifts in the competitive environment. We believe Adobe has the potential to generate solid fundamentals over the next several years relative to the share price at which we initiated a position.”

Adobe Inc. (ADBE) Slips 10.45% Amid Doubts Over Firefly’s AI Monetization Potential

Adobe Inc. (NASDAQ:ADBE) is in the 13th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 104 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the second quarter, compared to 111 in the previous quarter.  In the fiscal third quarter of 2025, Adobe Inc. (NASDAQ:ADBE) reported record revenue of $5.99 billion, representing 10% year-over-year growth. While we acknowledge the risk and potential of Adobe Inc. (NASDAQ:ADBE) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Adobe Inc. (NASDAQ:ADBE) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Adobe Inc. (NASDAQ:ADBE) and shared the list of best American AI stocks to buy according to analysts. Mar Vista U.S. Quality Strategy exited its position in Adobe Inc. (NASDAQ:ADBE) during Q3 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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