Goldman Sachs Group, Inc.: Strong growth in AI business, reiterates "buy" rating on Adobe (ADBE.US)

Goldman Sachs Group, Inc. analyst Kash Rangan reiterated a "buy" rating on Adobe (ADBE.US) and set a target price of $570. Adobe's strong performance in third quarter revenue, profit margins, and cash flow, along with moderate revenue guidance, were noted. Despite investor concerns about the sustainability of Adobe's double-digit growth, analysts believe that artificial intelligence is key to boosting annual recurring revenues in the digital media business. They pointed out that Adobe's AI-first annual recurring revenue has already exceeded its target of $250 million for the fourth quarter of fiscal year 2025. If this growth rate can be maintained, the AI business is expected to stabilize and accelerate in 2026. This could open up new revenue streams, allowing Adobe to sell higher-end products. Overall, artificial intelligence is becoming a major driver of long-term growth for Adobe. In conclusion, Goldman Sachs Group, Inc. believes that artificial intelligence is helping Adobe achieve a turning point in its overall business and bring about longer-term compound growth. The firm also sees the upcoming Adobe MAX conference and investor meeting (October 28) as a potential catalyst, hoping to gain clearer information about artificial intelligence and the company's broader long-term framework.