Adobe Stock Forecast: Artificial Intelligence Is Boosting Adoption of Adobe’s Software Products

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Creative Cloud subscriptions is Adobe’s core revenue and net income growth driver.
  • Management team is brilliant too. They offer regular promotional offers of discounted monthly subscription fees for Creative Cloud.
  • It also important that Adobe Sensei’s cloud artificial platform is successfully helping Creative Cloud software users perform their tasks faster.
  • AI helping improve the production rate of content creators, graphic artists, video editors, special FX compositors, and animators fortifies the loyalty of Adobe’s customers.
  • Increasing the number of loyal Creative Cloud paying customers ultimately helps Adobe remain a strong growth stock.

Adobe’s (ADBE) stock already touts YTD gain of 18.22%. I am still endorsing it as a strong buy. I am highly confident ADBE has more upside potential this year. My end-of-2019 price target for ADBE is $280. Reason for this is that its main revenue (and net income) growth driver, Adobe Creative Cloud is still growing. Creative Cloud is why Adobe is among the leaders in the $258 billion/year cloud computing platform & services industry.

(Source: Seeking Alpha)

I expect Creative Cloud subscriber growth to get a serious boost this year because of the 25% to 40% discounts that Adobe consistently offers to individual and corporate customers. I am a die-hard customer of Adobe since 1996. One the reasons for this lifetime loyalty is because I love it when Adobe offers freelancers like me a notable discount when subscribing to all apps package.

I rate ADBE as a strong buy.  Even though it already has a monopoly on creative/design software products, management is generous in regularly offering time-limited promotional offers like the one illustrated by the screen shot below. Instead of paying $50 for 1 month usage of all Adobe software products, you can now do so for just $40.

(Source: Adobe)

Great Management Team

A stronger growth in Creative Cloud subscriber count is compelling reason to go long or add more ADBE shares. The rapid growth of Adobe as a SaaS (Software-as-a-Service) company is because of its brilliant management team. There are dozens of cheaper/free alternatives to Creative Cloud software programs. However, the clever management team was able to maintain Adobe’s dominance for the last two decades. Adobe’s managers know how to market software products and protect/growth a base of loyal software subscribers.

Adobe’s SaaS success story is because it charges affordable monthly/annual subscription fees. It also likes giving away discount coupons.

Just refer to the chart below, Adobe only went full SaaS in early 2013. ADBE’s stock price has risen from less than $60 to $267.45.

Note the massive growth in Adobe’s net income since 2015. The 5-year average compound annual growth rate in Adobe’s revenue is only 17.36%. Adobe has a great management team simply because it was able to grow the company’s 2014 net income of $268 million to $2.591 billion in 2018.

(Source: MarketBeat)

Sensei AI Cloud Platform Is Also Boosting Creative Cloud

Aside from promotional discounts, Adobe Sensei artificial intelligence is the bigger catalyst for Creative Cloud. Sensei is helping people accelerate their workflow. The Sensei AI engine is even available on the $99 Photoshop Elements entry-level software product. Sensei is simply why Creative Cloud has 99% market share in the advertising/creative industry.

Thanks to Adobe Sensei AI is why, it is now very easy to delete unwanted objects/people in video footages. Using the $19.99/month After Effects software of Adobe, video editors and compositors can now quickly unwanted elements in a recorded video file. This ability is like a holy grail for wedding/events videographers and video journalists.

Sensei’s AI algorithm makes doing tedious and boring Photoshop and After Effects tasks easier and faster. Time is money and features like workflow-accelerating features like Adobe Sensei helps artists, editors, and content creators make more money.

Creative professionals who can make more money in a shorter time will consequently remain loyal subscribers of Creative Cloud. Adobe’s stratospheric valuation right now is mainly due to its 15 million Creative Cloud subscribers.

Conclusion

Adobe has a golden future ahead of it. Its Creative Cloud software-as-a-service business is a massive growth catalyst that is still growing. Adobe Sensei and regular promotional discount offers will keep 15 million Creative Cloud paying customers forever loyal.

No other company on the planet right now can threaten Adobe’s invidious status as a monopoly in graphic design/content creation & editing software programs. This very fact is why I Know First’s AI stock-picking platform has a bullish 126.19 one-year trend score for Adobe’s stock. Any stock that has over 100 in market trend score is a buy.


How to interpret this diagram.

Past I Know First Success with Adobe Stock Forecast

I Know First has been bullish on Adobe’s shares in the past. On August 29, 2017, the I Know First algorithm issued a bullish 1 year for Adobe, the algorithm successfully forecasted the movement of the ADBE share. After a year, ADBE’s shares rose by 76.80% in line with the I Know First algorithm’s forecast. See chart below:

adobe stock price

This bullish Adobe stock forecast was sent to the current I Know First subscribers on August 29, 2017.

To subscribe today click here.

Please note-for trading decisions use the most recent forecast.