The promise of generative artificial intelligence hasn't been able to keep Adobe (ADBE) stock afloat this year, but long-time shareholders are still sitting on market-crushing returns.
After adding 77% last year, shares in the maker of application software for creative types lagged the broader market by about 35 percentage points through the first nine months of 2024. The company's announcement a year ago that it would add AI tools to Photoshop lit a second-half fire under Adobe stock. But then a pullback of some kind following such a torrid run isn't unusual for any name. Besides, many steps forward and a few steps back is sort of par for the course for volatile ADBE stock.
And make no mistake: jumping on the AI bandwagon was just what Adobe needed. For years, the company enjoyed a near monopoly in its niche. Its Creative Suite – which includes the likes of Photoshop, Premiere Pro for video editing and Dreamweaver for website design, among others – really had no peer.
But times change. The emergence of Microsoft's (MSFT) Azure and other cloud-based competitors have taken a bite out of Creative Cloud. Adobe's suite of products still commands a market share of more than 60%, but there's no question the company – and its shareholders – have been feeling the heat.
Just look at how shares have slowed down over the past few years.
Adobe stock has outperformed the S&P 500 by a wide margin over the course of its life as a publicly traded company, generating an all-time total return of 23%. By comparison, the broader market returned 10.6% over the same span.
The early 2020s have been a different story entirely. A terrible 2022 and an awful 2024 has ABDE stock trailing the broader market by wide margins over the past one-, three- and five-year periods.
The bottom line on Adobe stock
Adobe's hot 2023 run was a lot more like what longtime shareholders have come to expect from the stock. After all, anyone who plonked down just a thousand bucks into ADBE a couple of decades ago would have enjoyed truly outstanding returns.
Have a look at the chart below and you'll see that a $1,000 investment in Adobe stock 20 years ago would today be worth more than $21,000. The same money invested in the broader market would theoretically have grown to about $7,700.
True, Adobe stock remains about a quarter below its all-time closing high set back in November 2021, but analysts think it can reclaim those levels eventually.
After all, Wall Street is pretty bullish on the name. Of the 38 analysts issuing opinions on Adobe stock surveyed by S&P Global Market Intelligence, 19 rate it at Strong Buy, eight call it a Buy, eight have it at Hold, two rate it at Sell and one says Strong Sell. That works out to a consensus recommendation of Buy, with solid conviction.
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If You'd Put $1,000 Into Microsoft Stock 20 Years Ago, Here's What You'd Have Today
