Adobe (Nasdaq: ADBE) is reporting earnings after the bell today. Here are a few key numbers Wall Street expects, according to S&P CapitalIQ:
EPS: $4.97 (normalized)
GAAP EPS: $3.87
Revenue: $5.798 Billion
Adobe has become a ‘battleground stock’ with bulls arguing it is undervalued while bears argue that AI will erode the company’s moat.
Let’s look at some key themes for today’s earnings.
Key Earnings Themes
The bull case for Adobe is best illustrated by a recent presentation at the Sohn conference. We’ve embedded it below, but it’s a must watch for any investor who own Adobe.
The presentation makes a few key points:
Adobe has a strategic position in generative AI and provides rights-cleared AI outputs that will see significant demand in the years to come.
It also argues that Adobe is an AI leader that’s underappreciated with $3.5 billion in recurring revenue that’s attributable to AI.
Finally, it also presents that Adobe has significant upside potential that could reach $700 per share if it re-rates to be a beneficiary of AI rather than a company whose moat is being eroded.
The Bear Case
Of course, the bear case is that Adobe under threat as each iteration of AI becomes more powerful. OpenAI recently released new image generation tools that captivated the Internet. The question is whether Adobe’s current product becomes a feature of leading AI models, and creatives shift their spending toward paying for AI subscriptions and using cheaper editing software.
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