Adobe rises as BMO upgrades to outperform on AI push
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Adobe (NASDAQ:ADBE) shares rose more than 1% in pre-market trading on Wednesday after investment firm BMO upgraded the enterprise software maker, citing its continued push into using artificial intelligence. 
Analyst Keith Bachman, who moves his rating on Adobe (ADBE) shares to outperform from market perform and raised his per-share price target to $570 from $500, noted that a recent survey on Adobe Express has been "positive" and it's likely the company can generate roughly $1.8B in annual recurring revenue through fiscal 2024.
"One of our key assumptions in upgrading the stock is that new users and price/mix will more than offset generative AI efficiency gains, which may include seat pressure," Bachman wrote in an investor note. "The initial controlled and limited beta Firefly availability has generated interest from millions of users even while still in early stages, including from a large percentage of non-Creative Cloud users, which is supportive of our thesis."
Bachman also noted that there is the potential for "seat benefits" as more users adopt Creative Cloud and Adobe Express, given the abilities of generative AI to "make solutions easier to use."
"We note professionals indicate they would be more willing to pay for generative AI solutions compared with students/freelancers, though still half of the students/freelancers responses said they would pay more for generative AI solutions," Bachman added.
Last week, Adobe (ADBE) boosted its outlook for the remainder of the fiscal year after it reported better-than-expected quarterly results.
Analysts are largely bullish on Adobe (ADBE). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates ADBE a STRONG BUY.
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