Bank of America thinks software giant Adobe can build on this year’s strong gains as it continues its push into artificial intelligence The firm upgraded the stock to buy from neutral in a Thursday note and raised its price target to $630 per share from $575. BofA’s new forecast implies more than 22% upside from Wednesday’s $514.49 close. Analyst Brad Sills noted Adobe is on the verge of becoming a leader in AI and could start seeing strong returns as soon as next year thanks to the promise of the company’s own artificial intelligence software Firefly — which launched in March . “Adobe is ahead of the curve, and we believe that AI offerings (such as generative AI-powered content creation tool Firefly) are likely to begin driving meaningful revenue/[free cash flow] upside as soon as FY24,” Sills said. The analyst outlined a potential paid subscription option for Firefly coupled with credit packs for the service as well as agreements with other brands to blend data with Adobe’s own large-language model as opportunities for monetizing AI. “In a conservative base case, we arrive at AI revenue of $300 million in FY24, growing to $960 million by FY26 (which assumes Firefly penetration of 18% to the Creative Cloud/Express installed base),” he said. “In a blue-sky scenario, we arrive at AI revenue of $1 billion in FY24, growing to $2.9 billion by FY26 (which assumes 33% Firefly penetration to Creative Cloud/Express users).” Bank of America’s upgrade follows a similar move from Morgan Stanley last month . Morgan Stanley raised its rating on Adobe to overweight from equal weight — also citing the company’s AI potential. Adobe stock has soared more than 52% in 2023. ADBE YTD mountain Bank of America’s forecast implies more than 22% upside for Adobe. — CNBC’s Michael Bloom contributed to this report.
