Adobe (ADBE) and Broadcom (AVGO) are A+ stocks for the week, not only because their ticker starts with the letter A.
Days before it posted quarterly results, Adobe needed to allay consumer fears about its new terms and conditions. The firm said that it will not own the creative work of its users nor will it use the material to train its Firefly artificial intelligence technology.
ADBE stock gained 14.5% last Friday after reporting that new users are still the company’s growth drivers. Customers need Document Cloud and find the AI Assistant appealing. Additionally, people continue to pay a monthly subscription for Firefly, Creative Cloud, Photoshop, and Lightroom.
Just as Microsoft (MSFT) is integrating AI across its product roadmap, Adobe is doing the same. This enhances creativity and productivity.
In the semiconductor and infrastructure software space, Broadcom reported that the integration of virtualization software firm VMware is progressing well. It sifted to a subscription licensing model. This will increase its annualized booking value. More importantly, profit margins will rise.
Networking is Broadcom’s bright spot. Revenue grew by 44% and accounted for 53% of its semiconductor revenue. Customer demand for hyperscalers increased, driven by AI networking and custom accelerators.
Investors should not chase the rally in either stock. Instead, add both tickers to the watch list.