Sentiment around Adobe's upcoming report is mixed, with concerns about revenue leakage and competitive pressures. Analysts have noted that while Adobe's stock is cheaper than the software index, investors need to see tangible proof of AI monetization for the stock to gain momentum. The company's focus on increasing AI tool usage over immediate monetization has tested investor patience, but if Adobe can reassure investors about its long-term growth prospects, there is potential for the stock to rise.
Key takeaways:
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- Adobe Inc. is under pressure to prove its AI capabilities as its shares have fallen 8.3% this year, underperforming the software sector index.
- The company is focusing on integrating its AI technology, Firefly, into products like Photoshop and Illustrator, but investors are concerned about the slow rollout and monetization.
- Analysts expect Adobe's fourth-quarter results to show net earnings growth above 13% and revenue growth of almost 10%, but net new recurring revenue is anticipated to decline by 3.1%.
- Despite a lower valuation compared to its historical average and the software index, investors are looking for clear evidence of AI monetization to justify potential stock growth.