Adobe Inc (NASDAQ: ADBE) chief executive Shantanu Narayan pushed back against criticism that his company has been slow in terms of AI monetisation in an interview on Thursday.
All it has done is prioritise innovation and adoption before shifting focus to monetisation, he added.
The chief executive remains confident that focus on artificial intelligence will continue to drive significant growth for Adobe moving forward.
Adobe stock is down roughly 6.0% in premarket even though the software firm reported better-than-expected earnings for its fiscal first quarter last night.
How AI monetisation is advancing for Adobe
Shantanu Narayan said Adobe has already infused artificial intelligence into its products.
The company based out of San Jose, CA started with free offerings to prioritise adoption that has generated “billions of dollars in revenue in terms of customer acquisition and retention,” he added.
Adobe ended Q1 with “over $125 million in bookings for its new AI standalone,” which includes the Acrobat AI Assistant, GenStudio, and Firefly Services.
More importantly, the Nasdaq listed firm expects to double that number by the end of 2025.
Speaking with CNBC today, its chief executive downplayed the potential impact of tariffs as well, adding what’s matter more is that we “keep innovating and attracting new people to the platform.”
Versus its year-to-date high, Adobe stock is now down about 12%.
Adobe issued muted guidance for its fiscal Q1
While CEO Narayan took a positive tone on what AI may mean for Adobe Inc moving forward, investors are focusing more on the company’s guidance for the current quarter.
Adobe expects its revenue to fall between $5.77 billion and $5.82 billion in its fiscal Q2, which is only in line with analysts’ forecast.
Plus, the management’s outlook for $3.80 to $3.85 a share of earnings this quarter actually missed expectations of $3.91 a share. That’s why Adobe stock is taking a hit on Thursday morning.
Meanwhile, ADBE shares do not currently pay a dividend either to make it any easier for investors to digest the softness in guidance.
Analysts trimmed Adobe stock price target today
Adobe’s guidance does not bode well for the company’s AI ambitions, according to Stifel analyst J. Parker Lane.
“Sentiment continues to skew negative on Adobe’s potential to meaningfully benefit of GenAI proliferation in the near term,” he told clients in a research note on Thursday.
Following the earnings print, the analyst lowered his price target on ADBE shares as well to $525. His downwardly revised price target, nonetheless, indicates potential for more than 20% upside from current levels.
What’s also worth mentioning is that Stifel is not the only investment firm that lowered its price target on Adobe stock after the earnings. Oppenheimer also slashed the AI stock to $530 on Thursday.
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