How to Play Adobe Stock Ahead of Its Q2 Earnings？ - Adobe (NASDAQ:ADBE), AECOM (NYSE:ACM)

　　Adobe ADBE is scheduled to report its second-quarter fiscal 2024 results on Jun 13.

　　For the second quarter of fiscal 2024, Adobe projects total revenues between $5.25 billion and $5.30 billion. The Zacks Consensus Estimate for revenues is pegged at $5.28 billion, suggesting growth of 9.7% from the year-ago quarter's reported figure.

　　The company expects non-GAAP earnings between $4.35 and $4.40 per share. The consensus mark for earnings is pegged at $4.39 per share, indicating a 12.3% rise from the year-ago period's actual. The earnings estimate has been unchanged over the past 30 days.

　　The upcoming results are expected to reflect the benefits of growing generative AI capabilities on the back of its family of creative generative AI models, Firefly, which has been driving growth within the Digital Media and Digital Experience segments.

　　The Digital Media segment, comprising Creative Cloud and Document Cloud, is expected to have gained from the strong adoption of Firefly tools in Photoshop, Generative Fill and Generative Expand. The solid adoption of PDFs, coupled with strength in Frame.io, Adobe Stock, Acrobat ecosystem and Adobe Express Web, is anticipated to have been other positives.

　　Adobe expects Digital Media revenues between $3.87 billion and $3.90 billion. The Zacks Consensus Estimate for the same is pegged at $3.89 billion, indicating year-over-year growth of 10.7%.

　　The Digital Experience segment, comprising Adobe Experience Cloud, is likely to have benefited from the solid demand for the Adobe Experience Platform.

　　Adobe projects the Digital Experience segment's revenues between $1.31 billion and $1.33 billion. The Zacks Consensus Estimate for the same is pegged at $1.32 billion, implying year-over-year growth of 8.1%.

　　Adobe Inc. Price and EPS Surprise

　　Adobe Inc. price-eps-surprise | Adobe Inc. Quote

　　Strong Generative AI Efforts Aid Prospects

　　Adobe's near and long-term prospects are expected to gain from its strong efforts toward leveraging generative AI to deliver groundbreaking innovation across its portfolio.

　　The company has been aggressively integrating Firefly into its Creative Cloud flagship applications and Adobe Express to provide enhanced user experience.

　　ADBE's effort to integrate the power of Acrobat AI Assistant into PDF is boosting the adoption of the product in the near term.

　　Adobe's unveiling of the Firefly Image 2 Model, Firefly Vector Model and Firefly Design Model to mark a significant advancement in its creative generative AI model family is noteworthy.

　　The company recently launched Generative Remove in Adobe Lightroom, which is a powerful Firefly-backed tool that helps remove unwanted objects from any photo in a single click in a non-destructive manner.

　　The launch of Adobe Express for Enterprise, which is powered by Firefly Image Model 3, is helping the company gain traction across various enterprises.

　　The introduction of Photoshop's web version, which is available via Firefly-powered AI tools, generative expand and generative fill, enables file collaboration through sharing links, even without subscriptions.

　　The Zacks Rank #3 (Hold) company is also witnessing the strong adoption of Generative Fill in Photoshop, which allows the creation of images in new ways and acceleration of editing workflows.

　　Strong Customer & Partner Bases Aid Growth

　　A solid portfolio is helping ADBE in expanding its customer base.

　　International Business MachinesIBM is one of the notable customers leveraging Adobe Firefly. IBM was able to generate 200 campaign assets and more than 1,000 marketing variations in moments rather than months using Firefly models.

　　Adobe's other key customer wins include the likes of AECOMACM, Capital Group, DentsuDNTUF, NintendoNTDOF, Berkshire Hathaway, Northrop GrummanNOC, PorschePOAHF and the U.S. Navy.

　　ADBE's strategic partnerships with Microsoft MSFT and Alphabet GOOGL are also shaping its growth trajectory by driving its customer momentum.

　　The integration of Acrobat PDF technology into Microsoft Edge and Alphabet's Google Chrome is a major plus. Adobe is experiencing rising free-to-paid conversions on the back of its Acrobat extensions for Microsoft Edge and Google Chrome.

　　In addition, Adobe's recent partnership with Microsoft to provide marketing insights and workflows from Adobe Experience Cloud applications and Microsoft Dynamics 365 to Microsoft Copilot in order to assist marketers in creative briefs development, content creation and content approval management, is noteworthy.

　　Conclusion

　　Adobe is well-poised to benefit from its strong generative AI-powered product offerings and cloud strategy. A strong market position in the PDF category, compelling product lines, continued innovation and a growing footprint in emerging markets should drive its business growth.

　　Moreover, ADBE is trading at a significant discount, with a forward 12-month P/E of 24.04X compared with the industry's 31.85X, making it a good opportunity for investors.

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