So far, this year has been kind to semiconductor companies. That’s because most of them can benefit from the exploding interest in AI technology. However, the hardware companies may have run up a bit too quickly.
The software companies behind AI likely have more room to run. There’s a good amount of competition, both in AI prompts, and for developing AI software tools that can combine and leverage the power of multiple pieces of AI software.
One big cap winner in the space could be
Adobe (ADBE). The company was just upgraded thanks to their push into the creation of AI software tools. While the upgrade pushed shares to a new 52-week high, there may be more room to run.
Adobe has grown its revenues and earnings by about 10 percent each over the last year. AI offerings could give the company more growth, which would more than justify the current multiple of about 33 times forward earnings.
Action to take: Investors may want to buy some Adobe shares now, and use future market pullbacks to buy more. At present, shares don’t pay a dividend, but they may in the future following some AI-driven growth.
For traders, the October $575 calls, last going for about $23.50, could see mid-double-digit gains on a further move higher for shares in the coming months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.