Adobe shares soared 14% before the bell on Friday after the Photoshop-maker raised its annual revenue forecast as more customers turned to its AI-powered editing tools.
The forecast allayed investor fears that Adobe, a major player in the market for editing tools for photos and videos, could lose customers to AI startups such as Dall-E maker OpenAI that allow users to generate images with simple text prompts.
It also showed Adobe’s AI efforts, including the Firefly image-generating software it rolled out last year, were paying off, with senior executive David Wadhwani saying existing users were moving to higher-priced plans to gain access to Firefly.
“Increasing availability of Firefly has translated to better traction across both new and existing users,” RBC Capital analysts said.
If premarket gains hold, Adobe will add about $30 billion to its market value. Its shares are down about 23% so far this year, compared with a gain of nearly 14% for the S&P 500 index.
At least six brokerages raised their price target for the stock on Friday.
The company raised the midpoint of its fiscal 2024 revenue forecast to $21.45 billion on Thursday, compared with its prior midpoint of $21.40 billion.
It reported $3.91 billion as revenue from its digital media business, which made up about 74% of its total second-quarter revenue of $5.31 billion. Analysts had expected total sales of $5.29 billion.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Mohammed Safi Shamsi)
