AI stock leader Adobe, one of the best stocks to watch right now, is testing a key support level in today's stock market action. Adobe is a member of the IBD Breakout Stocks Index.
Adobe, a maker of digital media and marketing software, is now working to monetize its innovations in generative artificial intelligence.
Just as Google parent Alphabet has with Bard and Microsoft has with Bing AI, Adobe continues to enhance and expand its presence in the AI space with Adobe Sensei, Adobe Firefly and Adobe SenseiGenAI.
Across all of these offerings, Adobe utilizes generative AI to create content, target specific audiences and power compelling and engaging customer experiences. Adobe has even expanded its generative AI tool to over 100 languages.
The shift into AI helped Adobe accelerate Q2 fiscal 2023 earnings per share to $3.91, a 17% year-over-year gain. That was up from a 13% EPS increase in Q1. While Wall Street forecasts a 15% EPS rise in the current fiscal year, analysts expect 13% earnings growth for the next fiscal year, per FactSet estimates.
That solid earnings growth, along with strong price performance, helps ADBE stock earn a perfect 99 IBD Composite Rating, according to IBD Stock Checkup.
AI Stock To Watch
The AI stock is pulling back to its 50-day moving average after peaking at 552.94 on July 31, per IBD MarketSmith chart analysis. An entry can be identified at 508.50.
The current pullback comes after a strong move past a cup base's buy point of 451.15 on June 9. Shares hit the 20% profit target from that buy point, so investors could have taken at least some profits in late July.
A key technical indicator to watch is the relative strength line. Currently, the RS line is close to hitting a new high, which is a sign of tremendous strength during a stock market correction.
Strong fundamentals and technicals make ADBE stock a top AI stock in today's stock market. But remember that it's a risky time to buy stocks because the market is in a correction.
Monday was Day 2 of a rally attempt, so a follow-through day could occur as soon as Wednesday. But you can find many of the next uptrend's leaders well before a follow-through happens.
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