Adobe on Monday unveiled major advancements to its Acrobat document software powered by artificial intelligence. But Adobe stock fell after the Federal Trade Commission filed a lawsuit against the company.
Starting Tuesday, Acrobat customers will be able to create and edit images in PDFs using simple text prompts. The generative AI feature is powered by Adobe's Firefly Image 3 Model.
Also, new capabilities in the Acrobat AI Assistant will enable customers to ask questions, get insights and create content across groups of documents and different document types, including Word, PowerPoint, text and more. Plus, Adobe announced enhanced meeting transcript capabilities in AI Assistant.
"Adobe is the inventor and innovator of PDF (portable document format) and with generative AI we're changing the game again," Abhigyan Modi, senior vice president, Adobe Document Cloud, said in a written statement.
He added, "With the new Firefly and AI Assistant capabilities in Acrobat, anyone can transform the information in their digital documents into actionable insights and visually compelling content — quickly and easily."
To show off its latest capabilities, Adobe is offering free access to the Acrobat AI Assistant for 10 days starting Tuesday.
Adobe Stock Drops After Lawsuit
In other news Monday, the Federal Trade Commission filed a lawsuit against Adobe and two of its executives over the software maker's subscription practices.
On the stock market today, Adobe stock fell 1.3% to close at 518.74.
The FTC claims the company pushed consumers toward the "annual paid monthly" subscription without adequately disclosing that canceling the plan in the first year could cost hundreds of dollars.
The U.S. antitrust regulator also alleges that Adobe executives Maninder Sawhney and David Wadhwani deceived consumers by hiding the early termination fee for its most popular subscription plan and making it difficult for consumers to cancel their subscriptions.
Sawhney is an Adobe vice president and Wadhwani is president of Adobe's digital media business.
Adobe has disputed the FTC's claims.
"We are transparent with the terms and conditions of our subscription agreements and have a simple cancellation process," Dana Rao, Adobe general counsel and chief trust officer, said in a written statement. "We will refute the FTC's claims in court."
ADBE Stock Gets Price-Target Hikes
The San Jose, Calif.-based company has emerged as a leader in generative artificial intelligence. Since OpenAI kicked off the generative AI race with its text, image and video generators, Adobe has been adding similar capabilities to its existing digital media and marketing software products.
Late Thursday, Adobe topped analyst estimates for its fiscal second quarter and raised its outlook for the full year. The news sent Adobe stock surging.
Adobe earned an adjusted $4.48 a share, up 15% year over year, on sales of $5.31 billion, up 10%, in the quarter ended May 31. Adobe said its results were driven by strong growth across its Creative Cloud, Document Cloud and Experience Cloud.
At least eight Wall Street analysts raised their price targets or ratings on ADBE stock after the report.
"Growth was most impressive in Document Cloud, as Adobe sees strong momentum from the introduction of AI Assistant and more enterprises migrate to higher-value offerings," CFRA Research analyst Angelo Zino said in a client note. He rates Adobe stock as buy with a 12-month price target of 630.
"We think Adobe is better positioned than most enterprise software companies to monetize AI across its ecosystem," Zino said.
Adobe stock has an IBD Composite Rating of 77 out of 99, according to IBD Stock Checkup.
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