Following its earnings report on Dec. 10, Adobe (ADBE) is nearing a new buy point and all-time high. The Silicon Valley-based company continues to deepen its AI, machine learning and personalization technology through its partnership with Microsoft (MSFT) and acquisition of Workfront.
Clearly one of the best growth stocks to watch, Adobe stock joins Microsoft, Apple (AAPL) and Tesla (TSLA) on Leaderboard. ADBE stock has also secured a position on the IBD 50 and IBD Long-Term Leaders.
In October, Adobe, Microsoft and C3.ai, the hot IPO that launched Dec. 9, combined forces to integrate AI technology into customer relationship management (CRM). The partnership brings together Adobe Experience Cloud, Microsoft Dynamics 365 and C3.ai’s models to industry-specific, AI-enabled CRM solutions.
AI Stocks To Watch: Adobe Sensei Experiences Machine Learning
As Adobe and Microsoft expand their AI and Big Data technologies, Adobe Sensei focuses on using AI and machine learning to create more informed decisions and highly targeted and personalized marketing experiences.
Working with data analysts, marketers, advertisers and other business professionals, Adobe Sensei delivers scalability to one-on-one customer experiences. The Adobe Sensei platform also uses analytics and Big Data infrastructure to predict customer behavior based on various attributes and conversion factors.
AI, Big Data Buys: Adobe Acquires Workfront
Earlier this month, Adobe completed its acquisition of Workfront. With over 3,000 customers and more than one million users, Workfront provides a management platform for marketers, enabling personalized marketing campaigns. Workfront’s applications programming interfaces (APIs) enable a seamless connection to Adobe Creative Cloud and Adobe Experience Cloud.
Adobe Stock Finds Support, Forms Double Bottom
Double-bottom bases tend to form amid stock market volatility, so it’s not surprising that Adobe stock has formed this common chart pattern. The buy point is 519.90, 10 cents above the peak in middle of the W-shaped formation.
ADBE stock is back above its 10-week moving average after slipping below that benchmark line while basing. While the relative strength line has been ticking higher, it remains shy of a new 52-week high.
Adobe did show above-average volume last week as it bounced off its 10-week line, so look for the RS line to also rebound.
In a sign of strengthening technical action, the 21-day line for Adobe stock is moving back above its longer-term 50-day moving average. It’s a positive sign of resilience when a shorter-term line climbs back above a longer-term benchmark.
Like Microsoft stock, Adobe has a long track record of stable earnings growth. Over the last three years, Adobe has delivered average annual EPS growth of 29%. During the same period, Microsoft has posted average annual earnings growth of 20%.
Adobe stock and MSFT are showing similar weekly chart action as both take aim at new breakouts. On Monday, Adobe stock opened the short trading week by coming off its lows for the day. Microsoft stock also rebounded, coming in with a nearly 2% gain.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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