Adobe (NASDAQ: ADBE) shareholders might wish they could use Photoshop, the tech giant’s flagship image-editing tool, to magically erase the stock’s disappointing performance in 2024. Despite solid growth and record profitability, shares are down about 30% in the past year. This seems related to uncertainty in the market about how the digital media giant is managing the emergence of artificial intelligence (AI), as both a competitive threat and a significant opportunity.
Nevertheless, Adobe remains on a firm footing into 2025, supported by overall strong fundamentals and several factors positioning the stock to rebound. With shares trading near a 52-week low, let’s look at three reasons that Adobe shares look like a great buy.
For over 30 years, Adobe has built a global leadership position in software categories spanning creative media, marketing tools, and document management. Its extensive portfolio of products like Photoshop, Premiere Pro, Illustrator, and Adobe Acrobat are recognized as industry standards, serving everyone from global enterprises down to amateur creators.
A large part of the company’s success has been its ability to constantly innovate, with that legacy a core part of its current AI strategy. Adobe has integrated AI and machine learning features across its app ecosystem, a major upgrade in functionality that improves productivity and enhances the user experience. Multiple generative AI models in Adobe Firefly are seen as game changers in the creative process.
While specialized AI companies like privately held Canva and OpenAI have introduced text-to-image and video generation features, Adobe maintains a significant advantage, with its more comprehensive offerings integrated with a professional-level application suite.
Ultimately, Adobe’s AI initiatives should further cement its market positioning and open up new growth opportunities. If you’re confident in the company’s ability to navigate its strategy for the changing technology landscape, you have a great reason to buy and hold the stock for the long run.
Adobe’s recent trends have been impressive. In its fiscal 2024’s fourth quarter (which ended Nov. 29), sales climbed by 11% year over year, alongside a 13% increase in adjusted earnings per share (EPS). Management highlighted significant demand from its AI offerings in segments like Digital Media, Creative Cloud, and Document Cloud.
The metric that stood out was Adobe’s remaining performance obligations (RPO) exiting the year at $19.96 billion, up 16% from the prior year. RPO represents the total value of subscriptions or services yet to be delivered to customers, which offers good insight into the company’s growth runway.
