Everyone Thinks AI Will Destroy Adobe's Business. Here's Why It Could Flourish Instead.

Since OpenAI's ChatGPT made its debut successful November 2022 and ushered successful the Age of AI, the S&P 500 has risen 68%. While mostly powered by gains from large tech stocks, plentifulness of different companies similar McDonald's and Starbucks person rallied connected expectations that AI-driven technologies volition supercharge productivity and summation margins.

Yet successful this clip frame, Adobe (NASDAQ: ADBE) has suffered. Shares of the $112 cardinal company, which offers originative products for photographers, video editors, graphic and acquisition designers, crippled developers, contented creators, marketers, and more, commercialized down 21% connected fears that AI content-creating technologies volition marque its services obsolete.

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This year, the sell-off has intensified, with shares down 23.5% twelvemonth to date. The mainstream media is piling on, with Forbes wondering whether Adobe is simply a "falling knife," portion Wall Street firms dumped a nett 4.8 cardinal shares past quarter.

The mounting pessimism astir Adobe is reflected successful rising abbreviated interest, oregon the percent of the company's banal that has been sold short. As you tin see, it's easy astatine an eight-year high.

The abbreviated sellers whitethorn beryllium right. But with bearish sentiment abounding, I'm reminded of thing the legendary capitalist Jim Rogers erstwhile said: "When there's thing astir markets that everyone 'knows' to beryllium true, it's clip to look astatine the different broadside of the trade."

On this advice, I've asked myself what the bears whitethorn beryllium missing -- and wherefore Adobe could beryllium a compelling bargain today.

In its archetypal earnings conference held aft ChatGPT took the satellite by storm, Adobe reported grounds gross of $19.41 cardinal for the just-completed fiscal year, and 17% net maturation twelvemonth implicit year, with beardown numbers successful its Creative Cloud, Document Cloud, and Experience Cloud segments.

Fast-forward 3 years, and Adobe again reported grounds results for the 2025 fiscal year. Revenue jumped to $23.77 billion, up 11% twelvemonth implicit year. Net income jumped to $7.13 billion, up from $5.56 cardinal successful fiscal 2024.

In the archetypal 3 fiscal years that person been reported since the Age of AI kicked off, here's however Adobe's revenue, nett income, and net per stock person fared.

Data source: Adobe.com.