2024-03-17 08:30:00 ET
Summary
- Adobe's fiscal first-quarter performance was robust, but its revenue guidance for FQ2 disappointed Wall Street.
- OpenAI's Sora AI tool potentially threatens Adobe's competitive moat.
- Despite the post-earnings plunge, Adobe remains a fundamentally strong company.
- I argue why the pessimism on ADBE could have peaked last week, as the market de-rated it below its long-term average.
- With investors bailing out in droves, it's time for long-term investors to return and pick up the pieces.
Adobe's Guidance Disappoints
I provided an update on Adobe Inc. ( ADBE ) in June 2023, articulating why I believe the fears attributed to image-generation AI companies were overblown. As a result, I viewed the bullish thesis on ABDE as robust then, arguing why ABDE was poised to break out higher. That thesis panned out accordingly as ABDE surged toward its late January 2024 highs, nearly reaching the $640 level. However, ADBE saw downward volatility in February, worsened by the post-earnings selloff attributed to worse-than-anticipated forward guidance provided at Adobe's recent earnings release. ...
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Adobe: Fears Have Likely Peaked, Time To Double Down (Rating Upgrade)