While Wall Street frets about whether generative artificial intelligence will be a cash cow, Adobe is making significant progress in monetizing its AI offerings, an ADBE stock analyst says.
Deutsche Bank analyst Brad Zelnick said his checks with Adobe customers indicate strong uptake of Adobe generative AI products like Firefly and Acrobat AI Assistant.
Sentiment around Adobe is generally positive ahead of the company's fiscal third-quarter earnings report, Zelnick said. The digital media and marketing software firm will release its Q3 results late Thursday.
"In our conversations with Adobe customers, we heard of the company more meaningfully expanding contracts upon renewal, driven by Firefly uptake (plus associated premium SKUs) and additional products like Acrobat AI Assistant," Zelnick said in a client note. SKU is short for stock-keeping unit, a term for identifying specific products.
Customers also are more accepting of price increases because they are seeing tangible value in products like Firefly, he said.
Zelnick rates ADBE stock as buy with a price target of 650.
On the stock market today, ADBE stock slid 0.8% to close at 563.41, amid a broader market decline.
ADBE Stock Rated 'Top Pick'
"Adobe is one of the few application software companies in our coverage successfully monetizing generative AI use cases today, both through price increases within core Creative Cloud and greater attach of other genAI products and services, such as GenStudio, all while driving a broader top of funnel with Express," Zelnick said.
A positive quarterly report from Adobe would help solidify the company's status as a "genAI winner," he said.
Elsewhere on Wall Street Friday, Mizuho Securities named Adobe stock as one of its "top picks" in the technology sector.
In a client note, Mizuho analyst Gregg Moskowitz reiterated his outperform rating on ADBE stock with a price target of 640.
"We believe that the breadth of Adobe's AI monetization is being underappreciated by the Street and that it should become more apparent" in the second-half of the year, he said.
On Sept. 3, ADBE stock touched a buy point of 580.55 from a cup-with-handle base before pulling back. Adobe remains within striking distance of the buy zone ahead of its fiscal Q3 report.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
