Adobe Systems (ADBE) is perhaps the best proof that not every big business that releases AI updates, and even its cutting-edge AI features, thrives immediately. Issues of its know-hows' monetization now come to the fore, and the creator of Illustrator, Reader, Acrobat and other popular software for computer graphics, photography, books' illustration, animation, multimedia/video, motion pictures etc still shows the lack of confidence in terms of its financial performance in the coming months.

The future may be bright, but the present condition of the stock's sentiment is still unclear. Adobe's market value just lost $22 per share (about 5.3%) once again on June 13 in response to its quarterly earnings release, after the stock had recently performed a 25% bounce off its annual low around $332 of early April to reach a local high at $422 on May 21, with its double retest in early June. Another slide below $400, and even below $385 at some point intraday, has not been avoided soon after the disappointing news, although a partial recovery of about 2.5% this Monday helped to touch $405 and close the session at $401.73. From a purely technical point of view, there is no clear reversal pattern for the bulls yet, but a 28% discount compared to the price at the beginning of the year could attract demand step by step.

Adobe reported some better-than-expected results for Q2, with its sales achieving $5.87 billion to bring +11% YoY. Earnings per share (EPS) came out at $5.06, also surpassing consensus estimates at $4.97. The company’s Digital Media segment with its major products like Creative Cloud and Document Cloud, added 11% YoY, while the Digital Experience segment saw a 10% pace. Markets are probably interested in substantially higher momentum in both Adobe’s current, and especially future, performance, as investors used to compare this pace with much faster pace when they are looking up more than 50% for some AI leaders.

Adobe has provided a lot of free or low-cost access to its new AI-featured products, but it still has $0.25 billion only in AI Direct Annual Recurring Revenue (ARR), which is commonly used as a financial metric to represent predictable, recurring sales numbers which a subscription-based business expects to earn from its customers. It may characterise Adobe's low stability in its immediate growth potential from self-repeating revenue streams. Adobe CEOs discussed AI's role in merging creativity and productivity, trying to focus on the company's "unique" positioning "in unified workflow", which is true, of course, but they still projected a revenue target around $23.5 billion and EPS between $20.5 and $20.7 for 2025, which may be not enough in the market's eyes in terms of financial return at the moment.

However, the market may quickly change its mind, as it recently did with chipmaker Advanced Micro Devices (AMD), as a good example. It had been lagging for months but has gained almost 10% sharply since the start of this week in response to some investment houses revising their price targets. Something similar could happen to Adobe stock if a critical mass of target revisions accumulates systematically.

For starters, Bernstein SocGen group is among the first ones who freshly raised its price target on Adobe to $530.00 from $525.00 soon after the weekend, while also maintaining its Outperform rating on Adobe's shares. It cited Adobe’s "potential to deliver approximately 10% revenue growth in the near term", with possible acceleration could be driven by its AI and "changes in go-to-market" strategy. Bernstein described Adobe as a "show me story" that has evolved into an "explain to me and show me story", while saying that noting that limited disclosure around business metrics make it difficult for experts to model Adobe's future growth trajectory, awaiting "more clarity around AI monetization" and new go-to-market initiatives and admitting some "near-term growth uncertainties".