Adobe (ADBE) AI Stock Analysis

• Market Cap: $144.94B
• Dividend Yield: N/A
• Average Volume (3M): 3.43M
• Price to Earnings (P/E): 21.6
• Beta (1Y): 1.02
• Revenue Growth: 10.69%
• EPS Growth: 35.19%
• Country: US
• Employees: 30,709
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 5.31
• Shares Outstanding: 418,600,000
• 10 Day Avg. Volume: 3,311,733
• 30 Day Avg. Volume: 3,432,026
• PEG Ratio: 8.80
• Price to Book (P/B): 16.35
• Price to Sales (P/S): 10.73
• P/FCF Ratio: 29.48
• Enterprise Value/Market Cap: 1.05
• Enterprise Value/Revenue: 6.56
• Enterprise Value/Gross Profit: 7.35
• Enterprise Value/Ebitda: 15.90
• 1Y Price Target: $465.67
• Price Target Upside: 34.49% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 25
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 78 Outperform
• Price Target: $385.00 ▲(11.19% Upside)

Adobe's strong financial performance and positive earnings call are the primary drivers of its stock score. While technical indicators suggest bearish momentum, the company's strategic focus on AI and raised revenue targets underscore its growth potential. Valuation remains fair, supporting a positive outlook despite competitive challenges.

Positive Factors

Strategic AI Partnership

The partnership with Google Cloud enhances Adobe's AI capabilities, integrating advanced AI models into Adobe apps. This strengthens Adobe's market position by offering cutting-edge tools, fostering innovation, and potentially increasing customer retention and acquisition.

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies. This positions Adobe well for sustained financial health and expansion, supporting long-term shareholder value.

AI Integration

Successful AI integration across Adobe's offerings enhances product value and customer engagement, driving future growth. This strategic focus on AI positions Adobe as a leader in digital innovation.

Negative Factors

Competitive Pressure

Increased competition from major tech companies in AI could erode Adobe's market share. This necessitates continuous innovation and adaptation to maintain competitive advantages in the evolving digital landscape.

Challenges in AI Adoption

While AI products show promise, the need for customer education may slow adoption rates. This could impact short-term revenue growth and requires investment in customer support and training.

Deceleration in Revenue Growth

Slowing revenue growth could indicate market saturation or increased competition. This may challenge Adobe's ability to sustain its growth trajectory and necessitates strategic initiatives to explore new markets or innovate existing offerings.

Adobe Business Overview & Revenue Model

Company Description

Adobe Inc. is a multinational software company headquartered in San Jose, California, known for its creative, marketing, and document management solutions. The company operates primarily in three segments: Digital Media, Digital Experience, and Publishing. Adobe's core products include Adobe Creative Cloud, which offers a suite of tools for graphic design, video editing, and web development; Adobe Document Cloud, which includes Adobe Acrobat and Adobe Sign for PDF management and electronic signatures; and Adobe Experience Cloud, providing analytics and marketing solutions to businesses.

How the Company Makes Money

Adobe generates revenue primarily through subscription-based services. The majority of its income comes from the Digital Media segment, specifically from Creative Cloud subscriptions, which offer users access to a wide range of creative software and services. Additionally, the Digital Experience segment contributes significantly to revenue through enterprise solutions that help businesses manage and analyze customer experiences. Adobe also earns revenue from its Document Cloud services. Key partnerships with various organizations, including educational institutions and enterprises, enhance its market reach and contribute to its earnings. The transition to a subscription model has led to a steady increase in recurring revenue, which is a core aspect of Adobe's financial strategy.

Adobe Financial Statement Overview

Summary

Adobe demonstrates strong financial health with high profitability, efficient capital management, and robust cash generation. Despite a deceleration in revenue growth, the company maintains a solid financial position with moderate leverage and strong returns on equity.

Income Statement

Adobe's income statement reflects strong profitability with a high gross profit margin of 89.25% and a net profit margin of 30.39% in TTM. Revenue growth is steady at 2.57% TTM, indicating consistent performance. EBIT and EBITDA margins are robust at 37.82% and 41.61% respectively, showcasing effective cost management. The company demonstrates solid revenue growth over the years, though the pace has slowed recently.

Balance Sheet

Adobe maintains a healthy balance sheet with a manageable debt-to-equity ratio of 0.57 TTM, reflecting moderate leverage. The return on equity is impressive at 55.19% TTM, indicating efficient use of equity capital. However, the equity ratio is not explicitly provided, which limits a full assessment of asset financing.

Cash Flow

Adobe's cash flow statement is strong, with a free cash flow growth rate of 1.72% TTM and a high operating cash flow to net income ratio of 1.06. The free cash flow to net income ratio is also robust at 0.98, indicating efficient cash generation relative to net income. The company shows consistent cash flow growth, supporting its operational stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	23.18B	21.50B	19.41B	17.61B	15.79B	12.87B
Gross Profit	20.66B	19.15B	17.05B	15.44B	13.92B	11.15B
EBITDA	9.56B	7.96B	7.78B	7.05B	6.67B	5.05B
Net Income	6.96B	5.56B	5.43B	4.76B	4.82B	5.26B
Balance Sheet
Total Assets	28.75B	30.23B	29.78B	27.16B	27.24B	24.28B
Cash, Cash Equivalents and Short-Term Investments	5.94B	7.89B	7.84B	6.10B	5.80B	5.99B
Total Debt	6.64B	6.06B	4.08B	4.63B	4.67B	4.71B
Total Liabilities	16.98B	16.13B	13.26B	13.11B	12.44B	11.02B
Stockholders Equity	11.77B	14.11B	16.52B	14.05B	14.80B	13.26B
Cash Flow
Free Cash Flow	9.60B	7.82B	6.94B	7.40B	6.89B	5.31B
Operating Cash Flow	9.79B	8.06B	7.30B	7.84B	7.22B	5.73B
Investing Cash Flow	-1.02B	149.00M	776.00M	-570.00M	-3.54B	-414.00M
Financing Cash Flow	-11.01B	-7.72B	-5.18B	-6.83B	-4.30B	-3.49B

Adobe Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 346.26
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADBE, the sentiment is Neutral. The current price of 346.26 is above the 20-day moving average (MA) of 325.92, above the 50-day MA of 337.34, and below the 200-day MA of 369.61, indicating a neutral trend. The MACD of -2.13 indicates Negative momentum. The RSI at 63.37 is Neutral, neither overbought nor oversold. The STOCH value of 91.92 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ADBE.

Adobe Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	80 Outperform	$3.59T	34.37	32.24%	0.71%	15.59%	15.89%
ADSK	78 Outperform	$65.03B	59.55	40.33%	―	15.62%	2.59%
ADBE	78 Outperform	$144.94B	21.57	52.87%	―	10.69%	35.19%
SNPS	74 Outperform	$86.70B	36.54	6.61%	―	3.21%	31.64%
U	65 Neutral	$19.59B	-43.61	-13.64%	―	-8.23%	48.57%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Adobe Corporate Events

Adobe’s Earnings Call Highlights Record Growth and AI Advancements

Adobe Systems Incorporated’s recent earnings call painted a picture of robust growth and strategic advancements, underscored by record revenue figures and strong AI integration. The sentiment was largely positive, driven by high customer adoption and innovation, though tempered by challenges related to competitive pressures in the AI space and the need for ongoing customer education on new technologies.