Adobe: Upgrading Into Earnings, Eyes On Firefly, Mixed Chart

Summary:

• Software stocks have sprung back to life in H2 2024, outperforming semiconductor stocks amid solid earnings and AI integration.
• Adobe’s Q3 results beat expectations, but soft guidance led to a stock dip; Firefly AI platform shows promise.
• Despite mixed valuation metrics, Adobe’s PEG ratio suggests undervaluation; key risks include competition and macroeconomic downturns.
• I maintain a buy rating on Adobe due to its undervaluation, ongoing earnings growth, and potential bullish technical indicators.

Software stocks have taken off in the second half of 2024. The iShares Expanded Tech Software Sector ETF (IGV) has not only turned significantly higher since the middle of the year, but it has

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