Clearbridge Large Cap Growth Strategy Sold Adobe (ADBE) Due to Concerns Over Market Penetration and Competition
In its second quarter 2025 investor letter, ClearBridge Large Cap Growth Strategy highlighted stocks such as Adobe Inc. (NASDAQ:ADBE). Adobe Inc. (NASDAQ:ADBE) is a technology company that operates through Digital Media, Digital Experience, and Publishing and Advertising. The one-month return of Adobe Inc. (NASDAQ:ADBE) was -9.02%, and its shares lost 34.41% of their value over the last 52 weeks. On July 3, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $379.31 per share, with a market capitalization of $160.903 billion.
ClearBridge Large Cap Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its second quarter 2025 investor letter:
"Following trims over the last several quarters, we exited a position in Adobe Inc. (NASDAQ:ADBE) due to concern about high levels of existing penetration of its product suite and competitive risks. AI won't be winner takes all, and Adobe is an example where we believe AI is lowering barriers to entry and increasing competitive pressure on the business. The due diligence that led us to sell Adobe is part of a broader analysis we have been conducting about the impact of agentic AI, software systems which complete tasks autonomously."
A team of engineers and scientists collaborating at a workstation surrounded by their applications and solutions.
Adobe Inc. (NASDAQ:ADBE) is in 13th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 111 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the first quarter, compared to 117 in the fourth quarter. In the fiscal second quarter of 2025, Adobe Inc. (NASDAQ:ADBE) reported revenue of $5.87 billion, representing 11% year-over-year growth. 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 undervalued AI stock set for massive gains.
In another article, we covered Adobe Inc. (NASDAQ:ADBE) and shared the list of trending AI stocks on news and ratings. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of ADBE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.
Disclosure: None. This article is originally published at Insider Monkey.
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