Adobe earnings help justify AI-fueled surge, but will the stock now 'take a breather'?

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Amid a mixed stretch for software earnings, Adobe's results and commentary stood out, according to one analyst.

Adobe Inc. shares had seen a 42% monthly rally in the lead up to its earnings as Wall Street deemed the company an attractive artificial-intelligence play, and the software giant’s latest report helped validate that surge.

The company hiked its expectations for fiscal 2023, including on the closely watched metric of annual recurring revenue. This boost signaled “confidence not only within the quarter but also for the upcoming quarters,” according to Bernstein analyst Mark Moerdler. “Adobe is a company that has invested thoughtfully over many years in AI and is well-positioned in the space now,” Moerdler wrote, as he lifted his price target on the shares to $585 from $431 and reiterated an outperform rating.Derrick Wood of TD Cowen highlighted that the tone on Adobe has shifted in a big way lately.

“With the stock up ~40% over the past month, we would not be surprised to see the shares take a breather at current levels,” wrote Evercore ISI’s Kirk Materne, who rated the stock at outperform and boosted his price target to $590 from $475 late Thursday.

 

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