Adobe (ADBE) Bets Big On Saudi Arabia While Wall Street Hesitates
That confidence has some backing. Adobe's AI-first products, the newer tools built around generative features, saw their annualized recurring revenue triple year over year to more than $500 million, evidence that artificial intelligence is adding to Adobe's business rather than just threatening it. The Saudi Arabia expansion extends that momentum internationally, giving Firefly and Express a built-in user base of millions who might otherwise never try Adobe's software, in a region where Humain and the country's sovereign wealth fund are pouring money into localized AI development.
Yet the stock's roughly 10 times forward earnings multiple says the market is not convinced the good times continue. The fear is straightforward: generative AI now lets anyone produce images and design work without needing Photoshop expertise, a skill that used to be the whole point of buying Adobe's software. Adobe faces that pressure not just from AI-focused startups but from Microsoft, and any regulatory shift like the European Union's AI Act could raise compliance costs and complicate how Adobe trains its own models.
Hedge fund enthusiasm has cooled recently. The number of funds holding Adobe fell from 86 to 81 in the most recent quarter, suggesting some institutional investors are trimming rather than adding. Short interest sits at 5.06% of the float, enough to indicate a real bear camp has formed around the stock. Adobe's forward price-to-earnings ratio of 10.57, as of August 31, remains low for a company still growing revenue in the double digits.
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