We recently published 15 Stocks on Jim Cramer’s Radar.  Adobe Inc. (NASDAQ:ADBE) is one of the stocks on Jim Cramer's radar. Adobe Inc. (NASDAQ:ADBE) is another software firm that has struggled in the age of AI. Its shares are down by 33% over the past year and by 12.5% year-to-date. January has seen several analysts share their thoughts on Adobe Inc. (NASDAQ:ADBE). Jefferies cut the share price target to $400 from $500 and reduced the rating to Hold from Buy. The financial firm discussed Adobe Inc. (NASDA ...

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Core Insights - ServiceNow (NOW) and Adobe (ADBE) utilize software-as-a-service (SaaS) technologies to aid enterprises in business transformation, with ServiceNow focusing on AI-powered workflow solutions and Adobe on creative software and digital experiences [1] Group 1: ServiceNow (NOW) - ServiceNow's workflows, including ITSM, ITOM, ITAM, security, and CRM, are gaining traction, with expectations for AI products to exceed $0.5 billion in annual contract value (ACV) by 2025 and reach $1 billion by 2026 [2] - The company is expanding its partner base with notable names like NVIDIA and Microsoft, and has made strategic acquisitions such as Logik.io and Moveworks to enhance its AI and workflow capabilities [3][4] - The acquisition of Veza strengthens its security and risk portfolios, while the $7.75 billion acquisition of Armis enhances its cyber exposure management capabilities [4] Group 2: Adobe (ADBE) - Adobe is experiencing strong demand for its AI-powered products, including Creative Cloud Pro and Acrobat, and is enhancing user experiences through new conversational interfaces [5] - The company has formed partnerships with major AI ecosystems like AWS and Microsoft, and has added 45 new partners in the last fiscal quarter, expanding its market reach [6] - Adobe targets a 10.2% annualized recurring revenue growth for fiscal 2026, driven by its innovative AI portfolio and expanding enterprise adoption [7] Group 3: Financial Performance and Valuation - In the past 12 months, NOW shares have decreased by 44.3%, while Adobe shares have dropped by 33.6% [9] - NOW is considered overvalued with a Value Score of F, trading at 8.24 times sales, compared to Adobe's Value Score of B and a price/sales ratio of 4.52 [12] - The Zacks Consensus Estimate for NOW's 2026 earnings is $4.03 per share, reflecting a 16.5% increase from 2025, while Adobe's estimate is $23.44 per share, indicating a 12% increase over fiscal 2025 [16][17] Group 4: Competitive Positioning - ServiceNow's robust AI portfolio, strong partner network, and strategic acquisitions provide it with a competitive edge over Adobe, which faces significant competition in the SaaS and AI sectors [18]

Core Viewpoint - Adobe (ADBE) stock is considered a good value buy due to its lower than average valuation, reasonable revenue growth, and strong margins that align with its modest valuation [2]. Valuation and Performance - ADBE stock is currently trading at a P/S (Price-to-Sales) ratio that is 37% lower compared to one year ago and has a P/E (Price-to-Earnings) ratio below the median of the S&P 500 [5]. - The company has demonstrated reasonable revenue growth of 10.5% over the last twelve months and an average of 10.5% over the past three years [11]. Margins and Cash Flow - Adobe maintains strong operating margins, averaging nearly 35.6% over the last three years, and has avoided significant margin collapse in the past 12 months [11]. - High subscription retention and adjustments to Creative Cloud pricing, along with new AI features, support solid operating cash flow and gross margins [6]. Growth Expectations - Annual Recurring Revenue growth is expected to moderate slightly to 10.2% for FY2026 from 11.5% in FY2025, but new AI-driven product capabilities like Firefly are enhancing user engagement and generative credit usage [6]. Market Sentiment and Risks - The current valuation discount reflects market caution regarding the costs of AI innovation and competitive pressures [6]. - Despite strong fundamentals, ADBE stock has a history of significant downturns during market crises, including a 72% decline during the Dot-Com bubble and a 67% drop during the Global Financial Crisis [7].

Company Performance - Adobe (ADBE) stock has decreased by 33.5% over the past 12 months, while Intuit (INTU) has declined by 13.2% [1] - Over the past five years, Adobe's stock has lost 38.5% of its value, with significant losses occurring between July 2025 and January 2026 [4] - The SPDR S&P 500 ETF (SPY) has had an annualized total return of 13.6% during the same period, highlighting Adobe's underperformance [4] Analyst Sentiment - Among 37 analysts covering Adobe, 20 currently rate it a Buy, a decrease from 25 three months ago, indicating a shift in sentiment [5] - The average 12-month target price for Adobe is $436.21, which is 50% above its current price, suggesting potential upside despite recent declines [5] Industry Outlook - Earnings for SaaS stocks in the S&P 500 are projected to grow by 14% this year, a decrease of 500 basis points from 2025, reflecting concerns about future growth [3] - Investor apprehension regarding the impact of artificial intelligence (AI) on SaaS companies is contributing to the negative sentiment surrounding stocks like Adobe and Intuit [2][6]

Adobe Inc. (NASDAQ:ADBE) is included on our list of the best undervalued wide moat stocks. Cautious Analyst Sentiment on Adobe (ADBE) Amid Intensifying Competition Across Core Creative Markets Copyright: photogearch / 123RF Stock Photo Amid intensifying competition pressures across its core creative markets, analyst sentiment surrounding Adobe Inc. (NASDAQ:ADBE) remains cautious. On January 14, 2026, Baird reduced its price target on the stock from $410.00 to $350.00, while reiterating a ‘Neutral’ ratin ...

Adobe Inc. (NASDAQ:ADBE) is one of the 10 Goldman Sachs undervalued stocks to invest in. Broader Analyst Sentiment Bullish on Adobe (ADBE) Amid Longer-Term Franchise Strength Adobe, software As of January 16, 2026, investor sentiment surrounding Adobe Inc. (NASDAQ:ADBE) remains cautiously constructive. Roughly 60% of analysts maintain their bullish tones with a consensus price target of $417.50, implying 37.30% upside. However, investor debate is growing around the company’s short-term catalysts and lon ...

Summary of Global Software Conference Call Industry Overview - The software industry is experiencing a significant shift in focus from macroeconomic concerns to the disruptive rise of AI, with investor discussions centered around whether an AI bubble exists and the potential impact of AI on enterprise software [1][11][15]. Key Themes for 2026 - **Valuation Reset**: Software valuations have halved over the past year, creating opportunities for investors to acquire high-quality stocks at discounted prices [14][31]. - **IT Spending Outlook**: Recent CIO surveys indicate one of the strongest IT spending outlooks since 2018, with expectations for a stable macro environment and lower interest rates supporting demand, particularly among small and medium-sized businesses (SMBs) [3][13][23]. - **Generative AI Impact**: While Generative AI is a major topic, its actual revenue impact on software companies is still limited. Most companies are not yet seeing significant revenue from AI, and the focus is shifting towards company-specific opportunities [6][15][19]. Company Recommendations - **Buy Recommendations**: - **Oracle (ORCL)**: Strong core business with significant cloud transition and market share gains in IaaS/PaaS, driven by unique offerings [4][27]. - **Microsoft (MSFT)**: Durable business with multiple growth levers and a reset valuation, positioned well for AI monetization [4][27]. - **SAP (SAP)**: Consistent double-digit revenue growth and margin improvement, despite AI cycle noise [4][27]. - **HubSpot (HUBS)**: Attractive entry point with strong SMB market positioning and potential benefits from AI adoption [4][27]. - **Cautionary Recommendations**: - **Salesforce (CRM)**: Concerns over underperformance and potential reliance on acquisitions to drive growth [4][29]. - **Snowflake (SNOW)**: Long-term growth concerns due to market saturation and competitive pressures [4][30]. - **Workday (WDAY)**: Growth deceleration and investor skepticism regarding AI's impact on its business model [4][28]. Financial Metrics - **Valuation Comparisons**: - Adobe (ADBE): Adjusted P/E ratios have decreased significantly, with a current valuation of 12.0x for 2026E [5][32]. - Microsoft (MSFT): Current P/E at 27.5x for 2026E, reflecting a reset from previous highs [5][32]. - Oracle (ORCL): Trading at a 0.9x PEG ratio, down from 1.4x a year ago, indicating a significant valuation adjustment [32]. Macro Considerations - **Economic Environment**: The macroeconomic landscape is expected to stabilize, with potential benefits from deregulation and tax cuts in the U.S. impacting SMB spending positively [6][23]. - **AI Adoption Timeline**: Enterprise adoption of AI is anticipated to take longer than expected, with significant visibility likely not occurring until 2027 or 2028 [22][23]. Conclusion - The software sector is at a pivotal moment, with significant valuation resets providing investment opportunities. However, the actual impact of AI on revenue generation remains uncertain, necessitating a cautious approach to investment in this space. The focus should be on companies with strong fundamentals and clear growth trajectories amidst the evolving landscape of AI and macroeconomic conditions [1][14][19].

Group 1 - EU retaliation tariffs are back in focus, reviving trade risk and raising concerns about second-order effects on supply chains and margins, particularly for globally exposed companies [1][3] - Industrials and multinationals with European exposure are likely to feel the pressure first when tariff narratives resurface [3] Group 2 - The introduction of credit card APR caps starting January 20 poses a risk for financials, raising questions about margin compression and reduced credit availability [4] - Stocks related to consumer lending and payments, such as SOFI, AXP, COF, SYF, and NU, are reacting to headline risks ahead of any finalized policy [4] Group 3 - The software sector is experiencing a risk-off rotation, with investors selling high-multiple growth names to de-risk portfolios amid policy uncertainty [5] - High-multiple software and data platforms like Snowflake, MongoDB, Salesforce, Adobe, and Datadog are under pressure as investors seek perceived safety and liquidity [5]

Core Viewpoint - Adobe's stock is expected to approach multi-year lows due to recent AI-related concerns impacting the software industry [1] Company Summary - Adobe (NASDAQ:ADBE) is facing downward pressure on its stock price as fears surrounding AI developments circulate within the software sector [1]