Adobe (ADBE) Boosts Acrobat Offerings With Generative AI

Adobe ADBE is riding on the solid momentum of its family of creative, generative AI models, Firefly, which has been bolstering its generative AI strength for some time now. The company is continuously making efforts to expand its Firefly-powered solution offerings to deliver enhanced customer experience.

ADBE recently integrated Firefly-powered Generative Fill, Remove Background, Erase and Crop features into Acrobat, which are designed to allow customers to edit images directly in PDFs. The company also integrated the Firefly Image 3 Model into Acrobat in order to aid customers in generating images and adding those to their PDFs.

Currently, editing and generating images can be done in around 3 trillion PDFs in circulation using text prompts, which are powered by Firefly.

In addition, Adobe added features to Acrobat AI Assistant to let customers ask questions, get insights and create content from information across groups of PDFs and other document types, including Microsoft Word, Microsoft PowerPoint and text files. It also introduced enhanced meeting transcript capabilities in AI Assistant.
These new features make Acrobat the first PDF solution to offer in-app generative image capabilities. The latest move has added strength to Document Cloud offerings, which will likely contribute well to the Digital Media segment’s performance in the near term.

In second-quarter fiscal 2024, Digital Media generated revenues of $3.91 billion, which improved 11% on a year-over-year basis. Document Cloud contributed $782 million to revenues, which rose 19% from the prior-year quarter.

Strengthening the Digital Media segment will, in turn, aid Adobe’s overall financial performance.

The Zacks Consensus Estimate for fiscal 2024 total revenues is pegged at $21.45 billion, indicating year-over-year growth of 10.5%. The same for fiscal 2024 earnings is pegged at $18.13 per share, implying a year-over-year rise of 12.8%. The EPS estimate has been revised upward by 0.9% in the past seven days.

Adobe Inc. Price and Consensus


Adobe Inc. Price and Consensus

Adobe Inc. price-consensus-chart | Adobe Inc. Quote

Growing Generative AI Solutions Aid Prospects

Per a Grand View Research report, the generative AI market size is expected to witness a CAGR of 36.5% between 2024 and 2030.

The Zacks Rank #3 (Hold) company is well-poised to capitalize on this growth prospect on the back of its strengthening generative AI-powered portfolio of solutions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adobe’s unveiling of the Firefly Image 2 Model, Firefly Vector Model and Firefly Design Model to mark a significant advancement in its creative generative AI model family is noteworthy.

The unveiling of Generative Remove in Adobe Lightroom, which is a powerful Firefly-backed tool that helps remove unwanted objects from any photo in a single click in a non-destructive manner, is a plus.

The launch of Adobe Express for Enterprise, which is powered by Firefly Image Model 3, is a positive.

The company also launched Photoshop’s web version, which is available via Firefly-powered AI tools, generative expand and generative fill.

Intensifying Competition: A Risk

Adobe has lost 12.4% year to date against the Zacks Computer & Technology sector’s growth of 14.4%. In the same time frame, the company has underperformed Amazon AMZN, Alphabet GOOGL and Meta Platforms META, from which it faces stiff competition in the generative AI space.

Amazon, which has gained 20.3% year to date, is benefiting significantly from the solid adoption of Amazon Bedrock, which has provided it with a breakthrough in the generative AI space.

Alphabet’s Google is capitalizing on the increasing demand for large language models with its most powerful AI model, Gemini. Solid momentum in Google’s Vertex AI, which enables developers to train, tune, augment and deploy applications using generative AI models, is another positive.

Alphabet shares have rallied 25.5% year to date.

Meanwhile, Meta Platforms, which has returned 41.4% year to date, recently introduced generative AI features to assist businesses in creating and editing new ad content, making the process quicker and more efficient.

These features include image and text-generation capabilities, image variation, and the ability to create alternate iterations based on original creative, helping businesses reach their target audiences more effectively.

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