How Ai Affected Adobe Stock

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How Ai Affected Adobe Stock

How Ai Affected Adobe Stock

The AI race has led to double and even triple-digit returns in a lot of growth tech stocks. But at the same time, many stocks were negatively impacted by AI, and Adobe was one of them.

Normally, one would think that an established tech stock like Adobe should have benefited from the AI. But that's far from the truth, as AI-powered image editing and image generation tools seriously impacted Adobe's customer base.

Adobe'S Revenue Growth Has Declined

It's not like Adobe didn't adopt itself for the AI as the company also introduced AI tools in Photoshop, Illustrator, and other tools.

But despite rolling out AI features in its products, Adobe (NASDAQ: ADBE) is still down over the last 5 years. In fact, Adobe has underperformed in the last 5 years when compared with the S&P 500.

quick look at the chart of Adobe's stock price shows it is down by 32% in the last 5 years. But, why was Adobe affected, given it's such a strong player in the tech sector?

Once again, it is due to the AI, as many users can now generate or edit images for free via AI. In fact, even the paid AI tools don't cost as much as Adobe's subscription.

In addition, software piracy is also a major concern for Adobe and is eating away at the company's bottom line. After all, the company spends so much money on R&D and rolling out new features. However, all of that goes in vain when users start to use the pirated copies of the software.

Since the year 2020, the revenue growth of Adobe has slowed down substantially. In addition, the P/E ratio of Adobe has also gone down over the years.

There's no doubt that the rise of AI tools has become a big issue for Adobe. The company is facing this problem even though it still has a loyal customer base.

However, the competition is increasing, and even the AI tools have now joined the race. So, this has made it tough for Adobe to raise the prices, which has ultimately affected growth.

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