Adobe, Oracle paint mixed AI picture for investors

let's turn to the software space Adobe disappointing the street yesterday after the close with a fiscal fourth quarter forecast that fell short of the Street's expectations the Outlook fueling some fears that the software company's AI Investments aren't paying off as quickly as investors would like we know that that has certainly been the focus here for investors when it comes to adobe's results over the last several quarters so the issue that the street is taking uh is having here with these results a lot of that has to do with the fourth quarter guidance and it's really overshadowing some of the beats that we saw in the most recent quarter they want Adobe to prove that it can make money from all the new AI tools but there are some concerns about the timeline of that and then I think Brad that coupled with the fact that there are so many startup smaller players within the space that are doing all they can to win and kind of gain some of that market share from Adobe and some of its other larger peers within the space when you talk about workday when you talk about Salesforce so that of course is adding I think to some of the pressure on the stock today yeah you hit the nail on the head with regard to the competitive pressures in the AI space here also you got to think about the fourth quarter more broadly and how it sits within the context for this company here the the Q4 guidance that we've seen as well for net new digital media annual recurring Revenue it is the lowest sequentially for this quarter and that is adding on to some of the pressures that investors believe to be a part of the story and then additionally here there are some larger questions about the growth and the sustainability of that growth into fiscal year 25 let's remember what type of AI features are really going to be positive for for Adobe and how this plays out for them when you think about going into a platform whether it be on a corporate uh or you know kind of Enterprise model or whether it be on an individual basis it's really coming back to this prompt the query and then the output there and for them to get this right it really relies on being able to have inferential uh type of models that have been able to access or at least scan so many different other creative pieces so that you could then shaa go into an Adobe Cloud or an adobe um you know to the extent that people are using um some of the uh image generation tools for AI which we know is already something that people are trying to safeguard against is you could go in there and say hey create an image of Brad on loch nest monster swimming through the serengetti or something like that and it would generate I mean look people can dream so at the end of the day that's what we're thinking about and how quickly they can actually bring that to fruition um and have it be as accurate as they intend and then the monetization on top of that what is the value that people are willing to pay for it yeah those are great points and I think when you compare especially some of the action that we're having in the pre-market to with the losses here in Adobe and square that with the gains that we are seeing in Oracle they updated their guidance last night that stoked some confidence within the stock you look at a gain of just about 6% here in the pre-market the bullish Revenue targets for 5 years out so they were much expected the bullish uh targets here for fiscal year 2026 but I think what's really grabbing the streets attention is Oracle 2029 Revenue targets Key Bank out saying that it match the bullishness that the company has been qu hinting at for a number of months now so you talk about the companies that are able to capitalize on some of that momentum within AI we are starting to see a clear picture of the winners and losers yes Adobe has a lot to be encouraged about I don't think it's anything like people are saying that they're falling behind when it comes to the AI race right now but I think that when at least when you're comparing the two moves here this morning when you take a look at oracle's guidance here for 2029 it is certainly very encouraging to the street yeah absolutely and we were talking yesterday about this too just with regard to how Oracle is going to be able to secure and continues to secure we should say key Partnerships that might make them one of the best software plays uh for AI and for generative AI you think about the data sets that companies like Oracle companies like sap have or Salesforce as well how they're able to leverage the data sets that they do have or their clients do have and wanting to be able to same same case here query and get an output um and make sure that you can layer in different customer relationship Management on top of that and all of the other enterprise resource planning tools that they had already had but just make it that much quicker and the access points that much more favorable for that portfolio client base um and then upsell them on some of those new tiers as well that's where Oracle is really proven that it's going to try and pull ahead of the rest of them part Partnerships with Amazon Partnerships with Nvidia they make that critical for Oracle to be one of those best plays right now