Adobe (ADBE): Assessing Valuation as AI Foundry Launch Marks New Monetization Drive

Adobe (ADBE) has debuted its new AI Foundry service, allowing enterprises to build custom generative AI models powered by their own intellectual property and branding. The launch highlights Adobe’s ongoing push to monetize AI at scale and expand revenue streams.

See our latest analysis for Adobe.

Adobe’s headline-making AI Foundry launch comes alongside a flurry of enterprise partnerships, including a new digital platform for Red Sea Global, and prominent appearances at major industry conferences. Despite these initiatives, momentum in Adobe’s share price has faded this year, with a 1-year total shareholder return of -27.5% and current share price at $357.55. However, longer-term returns have fared better. Investors are watching closely as excitement around its AI strategy runs up against increased competitive pressure and shifting sentiment in the broader tech sector.

If you want to see what other tech and AI players are making headlines, it’s a great moment to discover See the full list for free.

With analyst price targets well above current levels and recent underperformance weighing on sentiment, the big question is whether Adobe’s AI-driven evolution is undervalued by the market or if future growth is already fully priced in.

Most Popular Narrative: 6.7% Undervalued

According to the most popular narrative, Adobe's fair value estimate outpaces its last close of $357.55. This suggests the market may be missing some key drivers. The narrative, authored by Imperial, frames Adobe as a high-quality business facing historic disruption and incorporates the evolving risk landscape into its outlook.

The key catalyst is the enterprise adoption of Adobe’s generative AI, Firefly. Its "commercial-safe" status, a direct result of being trained on licensed assets, gives it a powerful advantage over competitors in the corporate world where copyright infringement is a major legal concern. This allows Adobe to tap into the durable industry tailwind of digital transformation, leveraging its existing enterprise relationships to drive meaningful new revenue and defend its pricing power.

Read the complete narrative.

Want to know exactly what turbocharges this valuation? There is a twist in the narrative: future growth, defensive spending, and a profit engine most rivals only dream of. Ready to uncover the numbers behind the projected turnaround and why this thesis is stirring excitement? Click through to see which financial levers matter most.

Result: Fair Value of $383.06 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain. Heightened competition or underwhelming AI adoption could quickly challenge the current outlook and alter Adobe’s long-term value proposition.

Find out about the key risks to this Adobe narrative.

Build Your Own Adobe Narrative

If you see the story differently or want to dig into the numbers yourself, you can craft your own perspective in just minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Adobe.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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