Digital media and marketing software firm Adobe impressed Wall Street analysts with generative AI innovations at the start of its Adobe Max conference on Monday. But monetizing those artificial intelligence advancements is a work in progress. Adobe stock wavered Tuesday.
"We're already monetizing the technology today," Adobe Chief Financial Officer Dan Durn told Investor's Business Daily.
Adobe has embedded AI technologies into its existing products like Photoshop, Illustrator and Premiere Pro, giving users more reasons to use its software, Durn said.
Adobe sees four ways to monetize generative AI, he said.
First, it will provide new value to its subscription plans. Second, it will deliver add-ons to current offerings, such as Acrobat AI Assistant. Third, it will provide tiered offerings for enterprise customers. And fourth, it will make stand-alone AI-first products like GenStudio and Firefly services.
"Those four vectors provide the strategy around monetizing AI," Durn said.
Meanwhile, Adobe is providing AI tools across its three cloud computing businesses: Creative Cloud, Document Cloud and Experience Cloud, he said.
"The velocity of innovation at Adobe is probably greater than it's ever been in our history," Durn said.
But Wall Street wants to see increased earnings from Adobe's generative AI innovations. The company has posted four consecutive quarters of decelerating earnings growth.
That helps explain why Adobe stock is down about 15% year to date through Tuesday's close.
Adobe Stock Rises On Max Conference News
On Monday, Adobe shares advanced 2.9% on news from Adobe Max conference.
In morning trades on the stock market today, Adobe stock climbed as much as 1.6% before turning lower along with the broader market. ADBE stock ended the regular session down 0.3% to 508.03.
Jefferies analyst Brent Thill reiterated his buy rating on Adobe stock with a price target of 700.
Investors are worried that Adobe's fiscal 2025 revenue will come in below the consensus estimate of 10.9% growth, Thill said in a client note. But the company's initial guidance tends to be conservative, he said.
"Adobe should be able to deliver double-digit growth in fiscal 2025, thanks to lagged benefits from late fiscal 2023 price increases, stepped up AI monetization, and ongoing tailwinds for digital content creation," Thill said.
Mizuho Securities analyst Gregg Moskowitz kept his outperform rating on Adobe stock with a price target of 640.
"Adobe remains very well positioned to benefit from digital transformation with its highly comprehensive end-to-end offering," Moskowitz said in a client note.
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