Adobe vs. Apple: Which AI-Driven Tech Stock is a Better Buy Now?
Adobe ADBE and Apple AAPL are infusing artificial intelligence (AI) into their core offerings. While Adobe is incorporating AI into its creative products, Apple is adding Apple Intelligence to its core operating systems that power iPhone, iPad, Mac and Wearables.
According to IDC, global spending on AI-supporting technologies will surpass $749 billion by 2028. IDC expects 67% of the projected $227 billion AI spending in 2025 will come from enterprises embedding AI capabilities into their core business operations. This bodes well for both Adobe and Apple stocks.
However, both stocks are playing catch-up in the AI domain against the likes of Microsoft, Amazon and Alphabet. Shares of Adobe and Apple have suffered from challenging macroeconomic conditions and volatility related to higher tariffs. Year to date, Adobe shares have lost 13.9%, outperforming Apple's drop of 21.8%.
Adobe and Apple Stock's Performance
So, Adobe or Apple, which has an edge under the current scenario?
The Case for Adobe Stock
Adobe has expanded its AI portfolio with Adobe GenStudio and Firefly Services, which help brands and their agency partners collaborate on marketing campaigns.
Adobe launched Firefly Video Model-powered Generative Extend in Premiere Pro, which leverages AI to instantly generate and expand the length of video and audio clips. Early in the fiscal second quarter, Adobe launched the new Firefly Image Model 4 for life-like images and the Firefly Image Model 4 Ultra for impeccable detail in complex visuals. Adobe Firefly is improving the potency of Creative Cloud desktop applications. The Firefly App is attracting users for AI-powered content ideation, creation and production, and its support for third-party models, including from Google, OpenAI and Black Forest Labs, is a key catalyst. First-time subscribers of the Firefly app grew 30% sequentially in the fiscal second quarter.
Acrobat AI Assistant is unlocking new levels of productivity by cutting time to insights through conversational interfaces. Adobe Express is using AI to enable consumers to quickly design and publish engaging content through conversational AI in an easy-to-use, all-in-one application. Adobe is integrating these solutions to facilitate a smoother creation-to-consumption process across mobile apps, web browsers and desktop offerings. Adobe's monthly active users across these categories surpassed more than 700 million users at the end of the second quarter of fiscal 2025.
Adobe's AI book of business from AI-first products, including Acrobat AI assistant, Firefly App and Services and GenStudio for Performance Marketing, is tracking ahead of the $250 million ending Annual Recurring Revenue (ARR) target by the end of fiscal 2025. The company exited the fiscal second quarter with Digital Media ARR of $18.09 billion, up 12% year over year.
The Case for Apple Stock
Apple is seeing better iPhone 16 sales in regions where Apple Intelligence is available. Apple expanded the availability of Apple Intelligence with iOS 18.4, iPadOS 18.4, and macOS Sequoia 15.4 updates in new languages, including French, German, Italian, Portuguese (Brazil), Spanish, Japanese, Korean, and Chinese (simplified) — as well as localized English for Singapore and India — and are accessible in nearly all regions around the world. At the end of 2025, Apple Intelligence will be available in eight more languages: Danish, Dutch, Norwegian, Portuguese, Swedish, Turkish, Chinese (traditional) and Vietnamese.
At this year's annual Worldwide Developers Conference, the company announced new Apple Intelligence features like Live Translation, updates to visual intelligence, as well as enhancements to Image Playground and Genmoji. Shortcuts can access Apple Intelligence directly. Developers also get access to the on-device large language model, which is at the core of Apple Intelligence. The latest features are now available for testing and are expected to be generally available this fall with supported devices.
Apple Intelligence is now getting added to Apple Wallet, and users can make purchases with Apple Pay. Powered by Apple Intelligence, Apple Wallet can now automatically identify, summarize and display order tracking details from emails sent from merchants or delivery carriers. Meanwhile, Apple Pay expands the ability to pay with rewards and installments to in-store purchases for added flexibility and choice.
Adobe Earnings Estimate Revision Positive, AAPL's Goes South
The Zacks Consensus Estimate for Adobe's fiscal 2025 earnings is pegged at $20.41 per share, up 5 cents over the past 30 days, indicating a 10.8% increase over 2024's reported figure.
The consensus mark for Apple's fiscal 2025 earnings has declined by a penny to $7.11 per share over the past 30 days, suggesting 5.33% growth over fiscal 2024.
Valuation: Adobe is Cheaper Than Apple
Both Apple and Adobe are overvalued, as suggested by the Value Score of D.
In terms of forward 12-month Price/Sales, Adobe shares are trading at 6.62X, lower than Apple's 7.04X.
AAPL and ADBE Valuation
Here's Why Adobe is a Better Buy Than Apple
Apple is expected to suffer from the underwhelming performance of Apple Intelligence and a delay in launch in important markets like Mainland China. Higher tariffs negatively impact Apple's China supply chain. Tariffs are currently expected to have a negative impact of roughly $900 million in the third quarter of fiscal 2025.
Meanwhile, Adobe's growing focus on improving monetization from Firefly and GenStudio is noteworthy. GenStudio for Performance Marketing is empowering teams to create their own on-brand content, supporting ad creation and activation for Google, LinkedIn, Meta, Microsoft, Snap and TikTok. In the customer experience domain, Adobe is gaining prominence with Amazon, Microsoft, SAP and ServiceNow choosing it as their preferred partner. These factors are expected to drive top-line growth for Adobe, which is now expected between $23.5 billion and $23.6 billion (up from previous guidance between $23.30 billion and $23.55 billion).
Currently, Adobe has a Zacks Rank #2 (Buy), making the stock a stronger pick compared with Apple, which has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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