Adobe Stock Climbs 3.73% with 52nd-Highest $1.52B Volume as Melius Downgrade and AI Competition Clash with Attractive Valuation Hopes

Adobe (ADBE) rose 3.73% on August 13, 2025, with a trading volume of $1.52 billion, ranking 52nd in market activity. The stock has faced prolonged pressure amid skepticism over its AI-driven growth prospects. Recent analyst actions highlight growing concerns about the company’s ability to compete with AI-native infrastructure providers and maintain profitability. Melius Research downgraded Adobe to "Sell," citing risks of value shifting toward firms like Microsoft and Oracle as AI evolves. Meanwhile, some analysts argue Adobe’s current valuation, trading at a 10-year low multiple of 16.7x 2025 earnings, presents an attractive entry point despite structural challenges.

Adobe’s recent Q2 2025 results showed improved revenue guidance and profitability, with $23.55 billion in projected revenue and $20.60 in expected EPS. However, stagnant remaining performance obligations ($19.69 billion in both Q1 and Q2 2025) have raised questions about the effectiveness of its AI tools. While the company’s Firefly AI has driven triple-digit subscriber growth, competitors like Canva’s AI tools are seen as potential threats. The stock’s 52-week low reflects a broader market trend where investors increasingly favor infrastructure players over traditional SaaS firms, per Melius’ warning about autonomous agent-driven value shifts.

Despite the bearish sentiment, Adobe’s strong cash flow and diversified revenue streams remain positives. The company’s net debt-to-EBITDA ratio of 0.7x suggests manageable leverage, and 25 of 35 analysts still rate the stock a "Buy." However, the Melius downgrade and broader "AI is eating software" narrative have amplified volatility. Investors are weighing Adobe’s undervaluation against risks of margin compression from emerging AI competitors and evolving customer preferences. The stock’s performance will likely hinge on its ability to demonstrate sustained AI-driven growth and defend its creative software ecosystem.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 yielded a total return of 31.52% over 365 days. The 1-day average return was 0.98%, with the best monthly performance in June 2023 (7.02%) and the worst in September 2022 (-4.20%). This approach captured short-term momentum but remained vulnerable to market swings, offering modest stability for low-risk investors.