The Nvidia (NVDA) artificial intelligence powerhouse continues to create a stir — and reach new peaks. Nevertheless, NVDA stock is notably absent from the latest roster of acquisitions by top mutual funds this month. Conversely, Adobe (ADBE) has caught the attention of astute money managers who have acquired $1.3 billion worth of Adobe shares.
The AI surge throughout 2023 has spurred demand across various sectors. Both this month and last, Adobe has joined forces with Microsoft (MSFT) on the radar of institutional investors allocating their capital.
In contrast, Nvidia has been missing from the list since October.
However, the most recent IBD Breakout Stocks Index, updated weekly, highlights both Adobe and Nvidia. While Nvidia continues its upward trajectory, Adobe stock is poised for a breakout to achieve its own record high.
Additionally, Adobe joins the ranks of the esteemed Magnificent Seven stocks, including Nvidia and Microsoft, indicating a notable uptick in demand. While 221 A+ rated funds from IBD have invested in MSFT and 120 in NVDA, a substantial 88 A+ rated funds have holdings in Adobe stock.
Adobe Stock Outperforms Nvidia Stock and Microsoft in a Key Metric
Despite not being featured on the IBD Long-Term Leaders list alongside Microsoft, Adobe boasts a superior Earnings Stability Rating compared to its AI counterpart. Unlike the Composite Rating where higher is better, a lower Earnings Stability Rating signifies more consistent earnings.
Adobe secures a robust rating of 4, surpassing Microsoft’s 6. In contrast, Nvidia trails with a rating of 28.
Adobe Stock Hits Buy Point — And Faces a Testing Period
While Microsoft is due to report earnings on Jan. 30 and Nvidia on Feb. 21, Adobe’s next performance update is slated for mid-March.
In its most recent quarterly report on Dec. 13, Adobe surpassed the \(5 billion milestone in sales, reflecting a 12% year-over-year increase to \)5.01 billion. The AI frontrunner achieved earnings per share of $4.24, marking a 19% surge from the corresponding quarter of the previous year.
With a second-stage flat base now established, Adobe stock is eyeing a buy point of 633.89. The innovative AI company is currently testing support at its 50-day moving average.
Following a 3% uptick in trading volume last Friday, Adobe stock reversed its course on Monday with even higher trading volume. As of Tuesday, it is striving to maintain both the 600 mark and its 50-day line. Although it closed below the 600 benchmark on Tuesday, it held steady above its 21-day line.
Meanwhile, Microsoft remains within the buy range, and Nvidia continues to hover around its all-time peak.
Shaq And Sundance Shine Spotlight on Adobe and AI
Establishing its dominance in marketing, analytics, and creative tools, Adobe has seamlessly integrated these elements to emerge as a force in generative AI. Spearheading what it terms Generation AI, the Adobe Sensei platform offers AI solutions for businesses.
With Adobe Sensei GenAI at the helm, generative AI endeavors to assist clients in reshaping every facet of their marketing strategies. From conception to execution to evaluation, Adobe aids partners in leveraging embedded AI technology to enhance their expertise and deliver precise, personalized customer experiences.
The AI pioneer is set to unveil the latest advancements and future prospects at the Adobe Summit 2024 in March. Under his stage moniker DJ DIESEL, NBA icon and entrepreneur Shaquille O’Neal is scheduled to address the event, which will feature AI luminaries and other industry experts from across the globe.
Just before the commencement of the 2024 Sundance Film Festival earlier this month, Adobe introduced significant audio enhancements to its tools to aid filmmakers in refining their sound design. The beta version includes AI-driven audio categorization to automate the recognition and labeling of dialogue, music, sound effects, and ambient sounds.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
