Is Adobe (ADBE) an Unbeaten Stock in the AI Environment?
ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the gap in equity leadership narrowed considerably as mega-cap growth stocks reaffirmed their dominance and obscured weakness in most of the market. The S&P 500 Index rose 4.28% while the NASDAQ Composite advanced 8.26% for the period compared to a 3.28% decline for the small-cap Russell 2000 Index. The strategy underperformed its Russell 1000 Growth Index benchmark in the quarter and delivered gains across five of the 10 sectors it invested in, on an absolute basis. The IT was the primary contributor while the consumer staples and industrials detracted from the performance. Overall stock selection and sector allocation detracted from performance, on a relative basis. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Large Cap Growth Strategy highlighted stocks like Adobe Inc. (NASDAQ:ADBE), in the second quarter 2024 investor letter. Adobe Inc. (NASDAQ:ADBE) is a diversified software company that operates through Digital Media, Digital Experience, and Publishing and Advertising. The one-month return of Adobe Inc. (NASDAQ:ADBE) was 23.49%, and its shares gained 14.43% of their value over the last 52 weeks. On July 5, 2024, Adobe Inc. (NASDAQ:ADBE) stock closed at $578.34 per share with a market capitalization of $252.942 billion.
ClearBridge Large Cap Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter:
"We have also learned to not allow short-term investor sentiment to undermine our long-term theses for the companies we choose to own. Adobe Inc. (NASDAQ:ADBE), for example, proved in raising guidance that the marketing and design solutions it offers are critical enough to customers to overcome perceived competition from generative AI. As growth investors, we will always have technology stocks as a core part of our portfolio, and we acknowledge that our 800 bps underweight to the sector has been a headwind in mega-cap-driven momentum periods. We have been carefully finding ways to close that gap with our recent IT purchases."
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Adobe Inc. (NASDAQ:ADBE) is in 20th position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 108 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the first quarter which was 105 in the previous quarter. Adobe Inc. (NASDAQ:ADBE) generated $5.31 billion in revenue in the quarter, up 11% year-over-year. While we acknowledge the potential of Adobe Inc. (NASDAQ:ADBE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We discussed Adobe Inc. (NASDAQ:ADBE) in another article and shared the list of biggest AI stories and ratings updates you should not miss this week. In its Q1 2024 investor letter, the Alger Focus Equity Fund mentioned that Adobe Inc. (NASDAQ:ADBE) declined during the quarter, despite robust Q1 results. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.