Adobe stock is riding AI hype to its best day since 2020

June 14, 2024

20 2 minutes read

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Adobe stock is rising the most it has in a single day in more than four years. That’s all thanks to AI.

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Adobe shares rose more than 14% in Friday morning trading as investors cheered the company’s second-quarter earnings results. Adobe reported record sales of $5.3 billion, surpassing Wall Street analysts’ expectations. The design software giant said demand for its AI products drove its sky-high sales.

CEO Shantanu Narayen told investors in a call late Thursday that its “strong quarter” was thanks to the “innovation that we’re delivering, and the way AI is actually making our applications both more affordable, easy to onboard, as well as frankly higher value uses.” He said the company has been focused on converting the “interest and the awareness of AI into monetization.”

Adobe launched Firefly, its set of generative AI models designed for its Creative Cloud suite, in the spring of 2023. The company unveiled a dozen new generative AI tools and a big partnership with Microsoft in March during its annual conference in Las Vegas.

Narayen said he thinks AI will continue to boost Adobe in the future, especially as investors begin to shift their focus and dollars from AI hardware companies to AI software firms (i.e. Adobe). “I am a big believer that generative AI is going to, for all the categories that we’re in, it’s actually going to dramatically expand the market because it’s going to make our products more accessible, more affordable, more productive, in terms of what we can do.”

While riding AI-related hype, Adobe has worked to get out ahead of controversies. Adobe co-founded the Coalition for Content Provenance and Authenticity (C2PA) with big players such as Microsoft, Arm, and Intel in 2021 to create digital content certification standards for AI-generated media. It says it’s fighting the improper use of deepfakes and AI-generated election misinformation. It’s also one of few companies that actually pay contributors to submit content to train their AI models. Meanwhile, OpenAI, Microsoft, and Google have been sued by authors and news outlets for potential copyright violations as they’ve scraped their writings from the internet to train their AI models without paying. However, recent changes in Adobe’s terms of service have some creators up in arms, as it requires them to hand over access to their creations.