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Adobe Inc. Elevates Annual Profit Forecast Amid AI Innovation
Adobe Inc. has significantly raised its annual profit outlook, forecasting robust future sales driven by the adoption of its new AI-based creative tools. This optimistic projection has caused a surge in its share price, which leaped over 14% in extended trading sessions.
For the fiscal year concluding in January, Adobe now predicts profits, excluding certain items, to reach up to $18.20 per share. This is slightly higher than analysts' average expectation of $18.02 and above its previous maximum forecast of $18 per share. Moreover, Adobe anticipates that digital media net new annual recurring revenue, a key indicator of new creative software business, will hit $460 million in the current quarter. This estimate surpasses the average forecast of $435.2 million.
Growth Fueled by AI Integration
The CFO of Adobe, Dan Durn, highlighted that the company expects an acceleration in the new creative business throughout the remainder of the fiscal year. The enduring market leader in creative software has recently contended with investor concerns about the potential impact of generative AI on its market share. Similar anxieties have troubled other application software companies such as Salesforce Inc., Workday Inc., and ServiceNow Inc., which have reported softening demand.
Positive Market Reactions
Adobe's promising results indicate that its efforts to embed AI functionalities into its products are resonating positively with customers. This strategy is integral as it competes with smaller competitors, including startups specializing in innovative technologies. Following the announcement, Adobe's shares peaked at $528.56, a significant increase from its closing price of $458.74 in New York. Despite this year's 77% gain, the stock had experienced a 23% decline from January prior to this boost.
