Here's Why Adobe (ADBE) Stock Is Climbing Today

Shares of Adobe Systems ADBE were up more than 10% in morning trading Thursday after the company felt a bullish reaction to several key announcements at its annual Adobe MAX user conference.

Most importantly, Adobe revealed preliminary financial targets for fiscal 2018 at a briefing with investors and financial analysts. The company is currently aiming for results that would exceed our consensus estimates and mark impressive year-over-year growth.

According to Adobe’s briefing, management expects total revenue of $8.7 billion next year. This comes in on the high end of our consensus estimate of $8.63 billion and would represent growth of about 20% from its estimated full-year 2017 total.

On the bottom line, Adobe expects non-GAAP earnings to come in at $5.50 per share. That would crush the current Zacks Consensus Estimate of $5.15 and mark year-over-year growth of nearly 31% from our fiscal 2017 projection.

“Adobe’s vision has never been more clear or more relevant – to empower people and businesses to design and deliver amazing digital experiences,” Adobe CEO Shantanu Narayen said in an accompanying press release.

It’s worth noting that Adobe’s fiscal year 2018 growth will be coming on the back of an already impressive year of growth in 2017. In fact, our current consensus estimates are calling for the company to finish the year with earnings growth of 39% and sales growth of 24%.

On top of this, Adobe’s announcement included impressive growth projections throughout its key segments. For instance, management expects its Digital Media unit to witness revenue growth of 23%, while its Experience Cloud segment’s total revenue is expected to swell by 15%. Breaking it down further, Adobe projects that it will see 20% growth in subscription revenue from its Experience Cloud segment.

In addition to its strong financial outlook, Adobe detailed even more of its future at this week’s MAX conference. Perhaps most interestingly, management clarified its overall intentions for its artificial intelligence platform.

“We are not building a general purpose AI platform like some others in the industry are — and it’s great that they are building it,” Adobe CTO Abhay Parasnis noted in a press conference.

“We have a very deep understanding of how creative professionals work in imagining, in photography, in video, in design and illustration… When one of the very best artists in Photoshop spends hours in creation, what are the other things they do and maybe more importantly, what are the things they don’t do? We are trying to harness that and marry that with the latest advances in deep learning so that the algorithms can actually become partners for that creative professional.”

Adobe announced its Sensei AI platform about a year ago. The company is focusing on attempting to integrate Sensei into its industry-leading digital media creation products, and it seems to have a particularly defined vision for what Sensei should do.

Currently, Adobe is a Zacks Rank #2 (Buy). The stock has been one of the hottest in an on-fire tech sector, and shares are now up about 50% year-to-date.

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