Adobe and Gen AI Hype
Adobe’s creative tools have leveraged various permutations of artificial intelligence for approximately 20 years. If you are interested in reviewing the history of AI at ADBE, I suggest reading this Adobe blog post, which isn’t exactly a recent post.
Why is Adobe touting AI more heavily today? Purely to goose its stock. I’m concerned that Adobe has positioned old fashioned AI technologies such as NLP (essentially natural language predictive analytics), as Generative AI in order to capture some of the valuation shine that Gen AI has bestowed upon NVDA, MSFT and private companies such as OpenAI, Anthropic and others.
Time will tell what kind of Revenue lift Gen AI may provide ADBE and other vendors who sell to end-users (the application layer). For the moment, Gen AI is a feature that has provided ADBE, MSFT and others with a bit of pricing power. However, I am not confident that Gen AI will translate into unit sales growth.
Regardless, ADBE will undoubtedly talk up Gen AI on this week’s earnings call as AI mania continues to run through the equity market as well as the venture market.
As for the Gen AI valuation bubble, it will hit a wall once this initial LLM build cycle subsides. The capital investment to date has largely been on NVDA chips and OpenAI’s LLMs. Microsoft is the big buyer as it works to try to differentiate Azure from AWS and Google Cloud.
I am confident in saying that I do not believe that Gen AI Revenue recognized over the next 5 years will come close to justifying the level of capital investment nor the valuation bubble that has inflated over the past year-plus.