Creative software leader Adobe on Wednesday announced the commercial availability of its Firefly generative artificial intelligence tool. ADBE stock rose on the news.
The San Jose, Calif.-based company said Firefly is now natively integrated into Creative Cloud apps like Photoshop and Illustrator. Firefly also is in Adobe Express and Adobe Experience Cloud.
Firefly supports text prompts in over 100 languages and enables users to create content that is safe for commercial use. Adobe trained Firefly using licensed content such as Adobe Stock and public domain content where copyright has expired.
"With over 2 billion images generated during the Firefly beta, generative AI is ushering in a new era of creative expression for customers across every segment," David Wadhwani, president of Adobe's digital media business, said in a news release.
He added, "Firefly's breathtaking capabilities combined with the rich tooling of our Creative Cloud apps, Express, the Firefly web app and Adobe Experience Cloud, give users unparalleled opportunities to work with generative AI in new, rich and productive ways."
Generative AI can create content — including written articles, images, videos and music — from simple descriptive phrases. Artificial intelligence systems analyze and digest vast amounts of data to create those new works.
ADBE Stock Rises On AI-Driven Price Hikes
On the stock market today, ADBE stock climbed 2.1% to close at 553.56.
Adobe increased its Creative Cloud pricing plans by 6% to 10% to account for the new generative AI features. It will implement the new prices starting Nov. 1.
"The price increase within Adobe's existing portfolio alone implies north of $600 million in incremental revenue from AI capabilities over the next year," William Blair analyst Jake Roberge said in a note to clients. He rates ADBE stock as outperform.
Jefferies analyst Brent Thill maintained his buy rating and 660 price target on ADBE stock on the news.
"Previously gen AI features were available for experimentation and personal use but not for commercial projects," Thill said in a note to clients. "This opens up widespread use of Firefly generated images in advertising, marketing, and other business purposes.
Adobe Earnings Report On Deck
The next catalyst for ADBE stock will be the company's fiscal third-quarter earnings report late Thursday.
Analysts polled by FactSet expect Adobe to earn an adjusted $3.98 a share on sales of $4.87 billion. That would translate to year-over-year growth of 17% in earnings and 10% in revenue.
On Monday, Jefferies analyst Brent Thill reiterated his buy rating on ADBE stock and raised his price target to 660 from 600.
Thill said he sees "a healthier demand environment" boosting Adobe's sales and earnings.
Last week, Mizuho Securities analyst Gregg Moskowitz upgraded ADBE stock to buy from neutral. He also raised his price target to 630 from 520.
"Adobe remains very well positioned to benefit from digital transformation with its highly comprehensive end-to-end offering," Moskowitz said in a note to clients.
He added, "In addition, we see signs of improving fundamentals across Digital Media and Digital Experience, and we have rising confidence in Gen AI as a significant growth driver."
ADBE stock is on IBD's Leaderboard and Tech Leaders stock lists.
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