The Nvidia artificial intelligence juggernaut continues to make waves — and new highs. Yet you won't find NVDA stock on this month's list of new buys by the best mutual funds. But you will find Adobe as savvy money managers scoop up $1.3 billion worth of Adobe stock.
Throughout 2023, the AI wave fueled demand across a wide swath of industries. Both this month and last, Adobe joined Microsoft on this screen that showcases where institutional investors are focusing their money.
Nvidia, on the other hand, has been AWOL from the list since October.
But the latest IBD Breakout Stocks Index, which is updated weekly, features both Adobe and Nvidia. As Nvidia continues to hit record highs, Adobe stock looks to generate a breakout and an all-time high of its own.
Adobe also joins Magnificent Seven stocks Nvidia and Microsoft in garnering another sign of demand. While 221 funds with an A+ rating from IBD have a position in MSFT and 120 have a stake in NVDA, a solid 88 A+ funds own shares of Adobe stock.
See Who Joins Adobe Stock On The IBD Breakout Stocks Index
Adobe Stock Trumps Nvidia Stock, Microsoft In This Key Metric
Although Adobe doesn't join Microsoft on the IBD Long-Term Leaders list, it actually has a better Earnings Stability Rating than its AI peer. Unlike the higher-the-better Composite Rating, the lower the Earnings Stability Rating the more stable the earnings.
Adobe earns a strong 4 rating, a better score than Microsoft's 6. Nvidia, by comparison, has a 28 rating.
Adobe Stock Generates Buy Point — And Testing Grounds
While Microsoft reports earnings on Jan. 30 and Nvidia on Feb. 21, Adobe doesn't give its next performance report until mid-March.
In its latest quarterly report on Dec. 13, Adobe eclipsed the $5 billion mark in sales, marking a 12% year-over-year gain to $5.01 billion. The AI leader drove earnings per share of $4.24, a 19% rise over the prior-year quarter.
Having now generated a second-stage flat base, Adobe stock is targeting a 633.89 buy point. The generative AI firm has just popped back above its 50-day line, rising nearly 3% in above-average and rising volume Thursday.
Up 1.6% for the week so far, Adobe now stands above three benchmarks: its 21-day line, 50-day line and the 600 mark.
Meanwhile, Microsoft just jumped to the very top of its buy range and Nvidia hits yet another all-time high.
Shaq And Sundance Put Spotlight On Adobe And AI
Firmly established as a leader in marketing, analytics and creative tools, Adobe has tied them all together to emerge as a powerhouse in generative AI. Advancing what it calls Generation AI, the Adobe Sensei platform provides AI for business.
With Adobe Sensei GenAI serving as co-pilot, generative AI aims to help clients reshape every aspect of their marketing initiatives. From planning to execution to analysis, Adobe helps partners deploy natively embedded AI technology to amplify their expertise and deliver more accurate and personalized customer journeys.
The AI leader will showcase what's new and on the horizon at the Adobe Summit 2024 in March. Using his stage name DJ DIESEL, NBA legend and entrepreneur Shaquille O'Neal is set to speak at the event, which features AI experts and other experts from around the world.
Just ahead of the 2024 Sundance Film Festival earlier this month, Adobe unveiled major audio updates to its tools to help filmmakers enhance their sound design. The beta release includes AI-powered audio category tagging to automate the identification and labeling of dialogue, music, sound effects and ambience.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
