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Tag: Adobe Inc.

  • Here are the three most important things to watch in the market this week

    Here are the three most important things to watch in the market this week

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    Traders work on the floor of the New York Stock Exchange during afternoon trading on September 05, 2024 in New York City.

    Michael M. Santiago | Getty Images

    It was a rough start to the historically weak month of September on Wall Street. Economic growth concerns and investor trepidation ahead of Tuesday’s presidential debate and the Federal Reserve’s policy meeting later in the month sank the market.

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  • Stocks making the biggest moves midday: Netflix, SunPower, Adobe and more

    Stocks making the biggest moves midday: Netflix, SunPower, Adobe and more

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  • AI stole the show this year, but earnings will drag Wall Street back to reality

    AI stole the show this year, but earnings will drag Wall Street back to reality

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    Nearly a year ago, OpenAI released ChatGPT 3 into the world, and investors got visions of dollar signs in their heads as they imagined the ways that artificial intelligence could make big money for businesses.

    Wall Street’s now coming to terms with the fact that those sorts of paydays are going to take time. As investors have already seen from the past two quarters of earnings, AI has only really delivered financial benefits for a select few hardware companies so far — while spurring new costs for many others.

    “The AI boom has already bifurcated into the contenders and pretenders,” said Daniel Newman, chief executive and principal analyst of Futurum Research. And while Advanced Micro Devices Inc., Intel Corp. and Arm Holdings PLC
    ARM,
    +0.38%
    have stirred up interest, Nvidia Corp.
    NVDA,
    -4.68%
    has established itself as far and away the greatest “contender,” with AI driving strong demand for its chips tuned for AI training.

    Nvidia last quarter reported record earnings, including a 141% jump in revenue for its graphics chips used in AI infrastructure building up data centers. Nvidia, which reports near the end of earnings season on Nov. 21, posted record revenue of $13.5 billion last quarter and is expected to easily top that with $16 billion in the most recent quarter, a surge of 170% versus a year ago. Those estimates include $12.3 billion of revenue coming from data-center sales.

    Other chip companies could post gains from AI as well, but to far lesser extents. Candidates include Broadcom Corp.
    AVGO,
    -2.01%
    and system maker Super Micro Computer Inc.
    SMCI,
    +2.35%    ,
    as well as Marvell Technology Inc.
    MRVL,
    -0.91%    ,
    which last quarter told analysts that it expects to end the year at a revenue run rate of about $800 million this year from cloud/data-center chips related to AI.

    “This is well above what we had outlined last quarter. Put this in perspective: This would put us at the run rate we had previously communicated for all of next year,” Marvel Chief Executive Matthew Murphy told analysts.

    Super Micro is also riding the AI wave with its customized data-center servers that are designed to consume less power. But revenue in the September quarter is forecast to rise just 15% from a year ago and drop on a sequential basis, as supply constraints from Nvidia likely hampered Super Micro’s ability to meet all its demand.

    Much as Advanced Micro Devices Inc.
    AMD,
    -1.24%
    and Intel Corp.
    INTC,
    -1.37%
    want to be in the AI conversations with the graphics chips they hope will be used for AI data-center applications, they won’t see much of an impact yet from AI revenue. Plus, those companies are experiencing a slowdown in PC sales that may overshadow any small benefit from AI chips.

    The AI boom in chips is clearly not providing enough of a boost to lift finances for the overall semiconductor sector, which is forecast to see earnings fall 3.3% in the third quarter and post a revenue decline of 0.6%, according to FactSet. The industry is being dragged down in part by Micron Technology Inc.
    MU,
    -0.12%    ,
    which reported a 40% drop in revenue and a whopping fiscal fourth-quarter loss in late September for the quarter ended Aug. 31, which is included in FactSet’s third-quarter data. Even so, the company called a bottom to the memory-chip downturn.

    Read also: Micron’s AI focused chip won’t help financial results anytime soon.

    “Most of the consumer-based tech is still struggling, [including] PCs, laptops and to a certain extent smartphones,” said Daniel Morgan, senior portfolio manager at Synovus Trust Co. Wall Street has tempered expectations related to the impact of Apple Inc.’s
    AAPL,
    -0.88%
    iPhone 15 launch on the quarter, as estimates call for an overall 1% drop in September-quarter revenue. Last quarter, Apple executives forecast that both Mac and iPad sales would be down by double-digits and that revenue performance would be similar to its June quarter, when revenue fell 1.3%

    In addition, when asked about AI, Apple CEO Tim Cook said the company views AI and machine learning “as core fundamental technologies that are integral to virtually every product that we build.” Those comments, though, can also apply to the bulk of tech companies, where AI is built into software as another layer to improve a product. Internet companies such as Meta Platforms Inc.
    META,
    +0.89%
    and Alphabet Inc.
    GOOG,
    +0.36%

    GOOGL,
    +0.45%
    incorporate AI into their software and algorithms but don’t treat it as a specific, revenue-generating product.

    Other software companies are building AI into their products as separate features or add-ons, but they are still in the early stages of seeing whether or not customers will pay more for them. Take Microsoft Corp.,
    MSFT,
    -0.17%
    which has showed off Copilot, an extra AI feature for customers of Microsoft 365.

    “[Microsoft] can distinguish itself by providing more details around its AI revenue
    ramp since we don’t expect much information from Google, who really doesn’t seem
    to have the monetization plan for Bard and AI-assisted search (SGE) ready to
    articulate yet,” Melius Research analyst Ben Reitzes said in a note to clients this week. He also noted that the cost of offering AI products to consumers is steep, and requires lots of investment.

    “There are sophisticated issues to contend with for Microsoft, including balancing the potential for higher revenue from Copilots with the high costs per query and much-needed investment,” Reitzes said. “The balance of AI adoption vs. cost was implied when Microsoft guided to flat operating margins year over year for fiscal 2024.”

    Earlier this year, the Information reported that OpenAI, the creator of ChatGPT and recipient of a hefty investment from Microsoft, has costs of up to $700,000 a day, because the massive amounts of computing power needed to run queries. In February, OpenAI launched ChatGPT Plus, for $20 a month, a service that will give subscribers access to its AI during peak times and faster response times.

    Another example is Adobe Inc.
    ADBE,
    +1.70%    ,
    which has a few AI offerings, including a subscription service called Generative Credits, tokens that let customers turn text-based prompts into images. Another is Firefly, a generative AI service for images, and an AI option in Photoshop, currently called Photoshop Beta AI, to help users fill in images and other collaborative tools. Adobe did not provide any forecasts on potential revenue generation during its analyst day earlier this month.

    Toni Sacconaghi, a Bernstein Research analyst, said AI could drive a massive increase in enterprise productivity, and companies could dramatically increase IT spending on servers in order to invest in productivity-enhancing AI. “However, we note that enterprise adoption appears to be in early stages,” he said in a recent note to clients, adding that it was feasible that spending on AI infrastructure could take money away from other IT projects in process. “We do worry that projected AI infrastructure build out may be occurring too quickly, necessitating a digestion period, which could result in a commensurate stock pullback in AI-related names.”

    Overall, the information-technology sector itself is expected to see anemic revenue growth this quarter. The consensus on FactSet forecasts a meager 1.35% revenue uptick in the third quarter, with earnings growth of 4.65%. FactSet’s estimates for IT companies exclude internet companies like Meta and Alphabet, which are under the category of communications/interactive media services. That sector is expected to see sales growth of 12%, and earnings growth of 51%, thanks to a 116% boost in Meta’s net income, after it hit a low point in the year-ago quarter.

    Amazon.com Inc.
    AMZN,
    -0.81%    ,
    in the category of consumer discretionary/broadline retail, is forecast to see earnings growth of 109%, and revenue growth of 11%. Amazon’s cloud services business, AWS, is expected to also see a potential uplift from customers spending money on AI projects, according to a TD Cowen & Co. survey, in which 41% of respondents said they were “highly considering” allocating a budget for generative AI.

    “This trend could bode well for Amazon’s AWS,” TD Cowen analyst John Blackledge said in a recent report, adding that he expects AWS revenue growth to reaccelerate in the second half of this year and in 2024, boosted by the move of additional workloads to the cloud, possibly including generative AI.

    As companies build up their infrastructure, or their spending on cloud computing to add or improve AI capabilities, they are seeing higher costs, which is affecting margins — especially if revenue has slowed down, as it has in some sectors. Across both the broader S&P 500
    SPX,
    and the IT sector, earnings are lower than a year ago.

    As Newman of Futurum pointed out, “AI stole the budget this year.” And that is a mixed bag for tech.

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  • Morgan Stanley says investors are overlooking a $4 trillion opportunity in AI. These are the top stocks to play it

    Morgan Stanley says investors are overlooking a $4 trillion opportunity in AI. These are the top stocks to play it

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  • How the generative A.I. boom could forever change online advertising

    How the generative A.I. boom could forever change online advertising

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    Sebastien Bozon | AFP | Getty Images

    Shortly after ChatGPT hit the market last year and instantly captured headlines for its ability to appear human in answering user queries, digital marketing veteran Shane Rasnak began experimenting.

    As someone who had built a career in creating online ad campaigns for clients, Rasnak saw how generative artificial intelligence could transform his industry. Whether it was coming up with headlines for Facebook ads or short blurbs of ad copy, Rasnak said, jobs that would have taken him 30 minutes to an hour are now 15-minute projects.

    And that’s just the beginning.

    Rasnak is also playing with generative AI tools such as Midjourney, which turns text-based prompts into images, as he tries to dream up compelling visuals to accompany Facebook ads. The software is particularly handy for someone without a graphic design background, Rasnak said, and can help alongside popular graphic-editing tools from Canva and Adobe’s Photoshop.

    While it’s all still brand new, Rasnak said generative AI is “like the advent of social media” in terms of its impact on the digital ad industry. Facebook and Twitter made it possible for advertisers to target consumers based on their likes, friends and interests, and generative AI now gives them the ability to create tailored messaging and visuals in building and polishing campaigns.

    “In terms of how we market our work, the output, the quality and the volume that they’re able to put out, and how personalized you can get as a result of that, that just completely changes everything,” Rasnak said.

    Rasnak is far from alone on the hype train.

    Meta, Alphabet and Amazon, the leaders in online advertising, are all betting generative AI will eventually be core to their businesses. They’ve each recently debuted products or announced plans to develop various tools to help companies more easily create messages, images and even videos for their respective platforms.

    Their products are mostly still in trial phases and, in some cases, have been criticized for being rushed to market, but ad experts told CNBC that, taken as a whole, generative AI represents the next logical step in targeted online advertising.

    “This is going to have a seismic impact on digital advertising,” said Cristina Lawrence, executive vice president of consumer and content experience at Razorfish, a digital marketing agency that’s part of the ad giant Publicis Groupe.

    In May, Meta announced its AI Sandbox testing suite for companies to more easily use generative AI software to create background images and experiment with different advertising copy. The company also introduced updates to its Meta Advantage service, which uses machine learning to improve the efficiency of ads running on its various social apps.

    Meta has been pitching the Advantage suite as a way for companies to get better performance from their campaigns after Apple’s 2021 iOS privacy update limited their ability to track users across the internet.

    ‘Personalization at scale’

    As these new offerings improve over time, a bicycle company, for example, could theoretically target Facebook users in Utah by showing AI-generated graphics of people cycling through desert canyons, while users in San Francisco could be shown cyclists cruising over the Golden Gate Bridge, ad experts predict. The text of the ad could be tailored based on the person’s age and interests.

    “You can be using it for that sort of personalization at scale,” Lawrence said.

    Meta’s Advantage service has been gaining traction with retailers using it for automated shopping ads, according to data shared with CNBC by online marketing firm Varos.

    In May 2023, roughly 2,100 companies spent $47 million, or about 27.5% of their combined total monthly Meta advertising budgets on Advantage+, the Varos data showed. A month earlier, those companies directed 26.6% of their budget, or $44.9 million, to Advantage+.

    Last August, when Meta formally debuted its Advantage+ automated shopping ads, companies put less than 1% of their Meta ad spend into the offering.

    Meta Platforms CEO Mark Zuckerberg speaks at Georgetown University in Washington, Oct. 17, 2019.

    Andrew Caballero-Reynolds | AFP | Getty Images

    Varos CEO Yarden Shaked said the increase shows Facebook is having some success in persuading advertisers to rely on its automated ad technology. However, Shaked said he’s “not sold on the creative piece yet,” regarding Meta’s nascent foray into providing generative AI tools for advertisers.

    Similarly, Rasnak said Midjourney’s tool isn’t “quite there yet” when it comes to producing realistic imagery that could be incorporated into an online ad, but is effective at generating “cartoony designs” that resonate with some smaller clients.

    Jay Pattisall, an analyst at Forrester, said several major hurdles prevent generative AI from having a major immediate impact on the online ad industry.

    One is brand safety. Companies are uncomfortable outsourcing campaigns to generative AI, which can generate visuals and phrases that reflect certain biases or are otherwise offensive and can be inaccurate.

    Earlier this year, Bloomberg News found that AI-created imagery from the popular Stable Diffusion tool produced visuals that reflected a number of stereotypes, generating images of people with darker skin tones when fed prompts such as “fast-food worker” or “social worker” and associating lighter skin tones with high-paying jobs.

    There are also potential legal issues when it comes to using generative AI powered by models trained on data that’s “scraped from the internet,” Pattisall said. Reddit, Twitter and Stack Overflow have said they will charge AI companies for use of the mounds of data on their platforms.

    Scott McKelvey, a longtime marketing writer and consultant, cited other limitations surrounding the quality of the output. Based on his limited experience with ChatGPT, the AI chatbot created by OpenAI, McKelvey said the technology fails to produce the kind of long-form content that companies could find useful as promotional copy.

    “It can provide fairly generic content, pulling from information that’s already out there,” McKelvey said. “But there’s no distinctive voice or point of view, and while some tools claim to be able to learn your brand voice based on your prompts and your inputs, I haven’t seen that yet.”

    An OpenAI spokesperson declined to comment.

    A spokesperson for Meta said in an email that the company has done extensive research to try to mitigate bias in its AI systems. Additionally, the company said it has brand-safety tools intended to give advertisers more control over where their ads appear online and it will remove any AI-generated content that’s in violation of its rules.

    “We are actively monitoring any new trends in AI-generated content,” the email said. “If the substance of the content, regardless of its creation mechanism, violates our Community Standards or Ads Standards, we remove the content. We are in the process of reviewing our public-facing policies to ensure that this standard is clear.”

    The Meta spokesperson added that as new chatbots and other automated tools come to market, “the industry will need to find ways to meet novel challenges for responsible deployment of AI in production” and “Meta intends to remain at the forefront of that work.”

    Stacy Reed, an online advertising and Facebook ads consultant, is currently incorporating generative AI into her daily work. She’s using the software to come up with variations of Facebook advertising headlines and short copy, and said it’s been helpful in a world where it’s more difficult to track users online.

    Reed described generative AI as a good “starting point,” but said companies and marketers still need to hone their own brand messaging strategy and not rely on generic content. Generative AI doesn’t “think” like a human strategist when producing content and often relies on a series of prompts to refine the text, she explained.  

    Thus, companies shouldn’t simply rely on the technology to do the big picture thinking of knowing what themes resonate with different audiences or how to execute major campaigns across multiple platforms.

    “I’m dealing with large brands that are struggling, because they’ve been so disconnected from the average customer that they’re no longer speaking their language,” Reed said.

    For now, major ad agencies and big companies are using generative AI mostly for pilot projects while waiting for the technology to develop, industry experts said.

    Earlier this year, Mint Mobile aired an ad featuring actor and co-owner Ryan Reynolds reading a script that he said was generated from ChatGPT. He asked the program to write the ad in his voice and use a joke, a curse word and to let the audience know that the promotion is still going.

    After reading the AI-created text, Reynolds said, “That is mildly terrifying, but compelling.”

    Watch: Social media showdown: Instagram to launch direct competitor to Twitter

    Social media showdown: Instagram to launch direct competitor to Twitter

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  • Here’s what an overbought market and endless negativity tell me to do this week

    Here’s what an overbought market and endless negativity tell me to do this week

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    Jim Cramer on Squawk on the Street, June 30, 2022.

    Virginia Sherwood | CNBC

    Not a great setup. There are too many articles and postings about how we are overdoing artificial intelligence, and how there’s not enough substance to justify recent market moves.

    There’s no question that the market, particularly the Nasdaq, has rallied endlessly on what amounts to the same information: Nvidia (NVDA) makes great cards; Adobe‘s (ADBE) putting them to use; so is Meta Platforms (META) but we don’t know how; as are Microsoft (MSFT), Alphabet‘s (GOOGL) Google and, most importantly, Oracle (ORCL); but don’t forget Broadcom (AVGO) and Marvell (MVRL).

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  • ‘I don’t like the tape here,’ Cramer warns on certain stocks

    ‘I don’t like the tape here,’ Cramer warns on certain stocks

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  • Stocks making the biggest moves midday: Sonoma Pharmaceuticals, Braze, Adobe and more

    Stocks making the biggest moves midday: Sonoma Pharmaceuticals, Braze, Adobe and more

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    GMC pickup trucks are displayed for sale on a lot at a General Motors dealership in Austin, Texas, Jan. 5, 2023.

    Brandon Bell | Getty Images

    Check out the companies making headlines in midday trading.

    Braze — Shares of the consumer engagement platform rallied 16%. On Thursday, Braze posted a non-GAAP loss of 13 cents on revenue of $101.8 million. Analysts called for a loss of 18 cents per share and revenue of $98.8 million, according to FactSet. Goldman Sachs reiterated its buy rating on the stock following the report, noting artificial intelligence should help the company gain market share.

    Joby Aviation, Archer Aviation — On Friday, Canaccord Genuity initiated coverage of Joby Aviation and Archer Aviation with a buy rating, saying the urban air mobility firms are positioned for the long term. Joby shares jumped about 11%, while Archer shares rose 6.2%.

    Sonoma Pharmaceuticals — Shares surged 44%. Sonoma Pharmaceuticals on Thursday announced an intraoperative pulse lavage irrigation treatment that could replace IV bags for some surgical procedures.

    Tesla, General Motors — Tesla rallied 4% and General Motors added 1%. On Thursday, the companies announced a partnership that gives GM access to Tesla’s North America charging stations. GM CEO Mary Barra said it will save the company up to $400 million of its previously announced $750 million investment to build out electric vehicle charging.

    DocuSign — DocuSign shares slid 2.5%. In an earnings call Thursday, CEO Allan C. Thygesen said, “We are seeing more moderate pipeline and cautious customer behavior coupled with smaller deal sizes and lower volumes.” Initially, shares rose in extended trading Thursday after DocuSign beat fiscal first-quarter expectations on the top and bottom lines, posting adjusted earnings of 72 cents a share on $661 million in revenue. Analysts polled by Refinitiv called for earnings of 56 cents a share and $642 million of revenue.

    Adobe — Shares popped 3.4% after Wells Fargo upgraded the software stock to an overweight rating, saying AI should drive continued upside for the stock.

    Target — Target declined about 3.3% after Citi downgraded the retail stock to neutral from buy, saying sales may have peaked at the big-box merchandiser.

    — CNBC’s Michelle Fox, Alex Harring and Samantha Subin contributed reporting.

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  • Microsoft is sprinkling OpenAI everywhere to try and keep software makers interested in its platforms

    Microsoft is sprinkling OpenAI everywhere to try and keep software makers interested in its platforms

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    Microsoft CEO Satya Nadella speaks at the company’s Build developer conference in Seattle on May 7, 2018.

    Grant Hindsley | Bloomberg | Getty Images

    If there’s one company that has popularized artificial intelligence in the past year, it’s the small but richly funded startup OpenAI, the entity behind viral chatbot ChatGPT.

    This week at its Build conference for software developers, Microsoft made extensive use of its collaboration with the startup, in which it’s invested billions.

    Front and center on Tuesday, the first day of the show, was a conversation onstage between Greg Brockman, OpenAI’s co-founder and president, and Kevin Scott, Microsoft’s technology chief and the person credited with building the unusually close relationship between the two companies.

    “You heard it from Greg,” Scott told the crowd assembled at the Seattle Convention Center in Washington near the end of the talk. “You all are the ones who are going to make AI great.”

    Toward that end, Microsoft announced a slew of products for developers that draw on OpenAI’s technology:

    • There are new Azure cloud tools for customized text summarization.
    • A forthcoming chatbot promises to help developers work with data and prepare it for analysis.
    • Developers will be able to build plugins that work inside of ChatGPT and the chatbots inside Microsoft’s own products, including one that will debut in Windows next month.
    • Developers who receive coding suggestions through the GitHub Copilot feature will gain access to a chatbot inside of the Windows Terminal command-line program.

    Generative AI will change software forever, says Nadella

    OpenAI released ChatGPT to the broad world in November, sparking lots of interest from consumers. Soon after that, companies such as Atlassian, Morgan Stanley and Salesforce rushed to show off integrations of OpenAI’s GPT-4 large language model, which powers the chatbot. GPT-4 and alternatives from the likes of Amazon and Google have been trained on extensive internet data sets and have become capable of spitting out chunks of natural-sounding text.

    It’s a popular form of what has come to be called generative AI, which can take human input and respond with a computer-generated output.

    “Every layer of the software stack is going to be changed forever and no better place to start than the actual developer stack,” Microsoft CEO Satya Nadella said during his Build keynote on Tuesday. “We as developers, how do we build is fundamentally changing.”

    It’s critical for third-party developers to keep enriching Microsoft’s own software properties, such as the Microsoft 365 productivity software bundle. Such work might help Microsoft’s Teams communication app, for example, become a more obvious hub for an increasingly wide selection of processes and tasks that companies need to carry out. That can make companies less likely to switch to alternatives such as Google Workspace.

    Microsoft highlighted dozens of plugin developers on Tuesday, including Adobe, Asana, Canva, Cloudflare, Redfin, Spotify and TripAdvisor. A demonstration showed the Windows chatbot turning on a Spotify playlist, creating a company logo with Adobe Express and sending the logo to a person’s colleagues over Teams in response to a series of typed messages.

    At the same time, Nadella has pushed for Microsoft to incorporate GPT-4 directly into Teams and older Microsoft products, such as the Bing search engine, often resulting in bots branded with the name Copilot. The Copilot term emphasizes collaboration with people, in contrast with (for example) the Autopilot advanced-driver assistance system for Tesla vehicles.

    “We are adding Copilot into everything,” Scott Guthrie, executive vice president of Microsoft’s cloud and AI group, told CNBC in an interview last week. “It’s less of a top-down mandate, although we’re certainly pushing top-down. I think it’s something where we’ve actually evangelized internally and really got every team excited about. And we are building a common stack across Microsoft that the entire company is building on top of.”

    Analysts responded favorably to the developer onslaught.

    “The pace of MSFT’s GenAI innovation remains stunning to us,” Mizuho analysts with a buy rating on Microsoft stock wrote in a Wednesday note to clients.

    Brockman hinted to developers that the cost of GPT-4, which runs in Azure, could come down.

    “I think we did a 70% price reduction two years ago,” he told Scott. “Basically, this past year, we did a 90% cost reduction. A 10x cost drop — like, that’s crazy, right? And I think we’re going to be able to do the same thing repeatedly with new models. And so GPT-4 right now, its expensive, it’s not fully available. But that’s one of the things that i think will change.”

    WATCH: Microsoft Build 2023 unveils plugins and products that incorporate A.I.

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  • Adobe results, outlook top Street views as ‘mission critical’ software tops spending priorities

    Adobe results, outlook top Street views as ‘mission critical’ software tops spending priorities

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    Adobe Inc. shares rallied in the extended session Wednesday after the software company topped Wall Street expectations for the quarter and hiked its outlook, while anticipating its acquisition of interactive-design platform Figma will close by the end of the year.

    Adobe ADBE shares rose 5% after hours, following a less than 0.1% gain to close the regular session at $333.61.

    The…

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  • Microsoft looked at buying Figma but declined to put in an offer as Adobe deal was nearing

    Microsoft looked at buying Figma but declined to put in an offer as Adobe deal was nearing

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    Dylan Field, co-founder and CEO of Figma, speaks at the startup’s Config conference in San Francisco on May 10, 2022.

    Figma

    As Figma was in talks about an acquisition with Adobe last year, the design software startup’s CEO, Dylan Field, approached another public company to gauge potential interest, according to a regulatory filing.

    That company was Microsoft, CNBC confirmed with a person familiar with the matter. Those talks weren’t serious and an offer never materialized, said the person, who asked not to be named because the details are confidential.

    Adobe ultimately agreed to buy Figma in September for $20 billion, the software company’s biggest purchase ever. In a year that saw tech stocks crater and the IPO market freeze, Adobe paid roughly 50 times annual recurring revenue for Figma, which was growing rapidly and encroaching on Adobe’s turf.

    The deal still awaits clearance from competition regulators in the U.K. and in the European Union, Wednesday’s filing says.

    Microsoft is intimately familiar with Figma’s technology and how quickly it can spread inside large organizations due to its focus on collaboration. The software lets people work together on app and website design from disparate locations. Prior to the Adobe deal, CNBC reported on Figma’s growing popularity inside Microsoft.

    However, Microsoft had its hands full with its own mega-deal. In January, the company agreed to buy video game publisher Activision Blizzard for almost $69 billion and would soon face calls for an antitrust investigation by U.S. lawmakers. In December, the Federal Trade Commission sued to block the acquisition.

    Party A

    Figma’s deal-related chats with Microsoft date back to May, after acquisition talks had begun with Adobe. Field told representatives of a publicly held technology company, identified only as Party A, that Figma might receive an acquisition offer, “and asked whether Party A would be interested in making an offer to acquire Figma,” the filing said.

    Qatalyst Partners, Figma’s financial advisor, met with someone at Party A to gauge the company’s interest. An executive there offered to sign a confidentiality agreement and meet with Figma management, according to the filing.

    Figma gave Party A — Microsoft — confidential details as part of the process. Three weeks after Field first reached out to the company, Party A said it was not interested in exploring an acquisition, the filing said.

    Still, Field tried to drive up the price. By July, after Adobe had said it would pay $20 billion for Figma, Field proposed a price of $23 billion “and a retention pool valued at approximately $3 billion.” That proposal went to David Wadhwani, president of Adobe’s digital media unit. Wadhwani said Adobe wasn’t willing to increase its offer.

    A few days later, Field came back to Wadhwani and asked about a $21.5 billion price. Wadhwani told him that the $20 billion price was firm.

    Adobe expects that current Figma shareholders will own about 4% of Adobe’s outstanding stock once the deal closes later this year.

    — CNBC’s Ari Levy contributed to this report.

    WATCH: Adobe’s revenue up 10% year-over-year on the back of subscription gains

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  • Adobe stock jumps after earnings beat, in-line annual forecast

    Adobe stock jumps after earnings beat, in-line annual forecast

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    Adobe Inc. shares rose in the extended session Thursday after the software company capped off its fiscal year by topping quarterly earnings expectations, and executives predicted the new fiscal year would play out close to Wall Street’s expectations.

    Adobe ADBE reported fiscal fourth-quarter net income of $1.18 billion, or $2.53 a share, compared with $1.23 billion, or $2.57 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $3.60 a share, compared with…

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  • Adobe Embraces AI Art, Can Get In The Bin

    Adobe Embraces AI Art, Can Get In The Bin

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    One of the AI-generated images Adobe used to promote their announcement

    Adobe used to be known as the company that made Acrobat and PhotoShop. Adobe is increasingly becoming known, however, as one of the great digital grifters of the modern age.

    From its shonky subscription models to making people pay for certain colours in PhotoShop (which is also Pantone’s doing in a “jointly” made decision), the company is, like so many others in these tumultuous times, more concerned with growing its bottom line no matter the cost than it is in taking a moment to consider the needs of its users, or the consequences of its actions.

    I’m bringing this up today because, a week after forcing people to check they weren’t reading an Onion story when learning about the colours thing, the company has announced that it is embracing AI art. This is not only an enormous grift, but also a serious threat to the livelihoods of artists around the world, big and small.

    I’ve made my feelings about AI very clear on this website already—I wrote this feature back in August interviewing a range of video game and entertainment industry artists—and think it sucks not just because it’s a threat to artists, but to art. While people’s jobs are of course important, we’re not just talking about cotton gins here, and how this is in many ways a labour v capital breakdown; we’re talking about a process that is encroaching on a fundamentally human pastime and creative pursuit.

    Machines don’t make art. They’re machines! They’re just making an approximated casserole out of human art that has been fed into it, in the vast amount of cases without credit or compensation. As Dan Sheehan says in his fantastic piece, Art In The Age Of Optimization, it’s merely “a technology that clearly exists to remove the human element from the process of artistic expression.”

    G/O Media may get a commission

    Anyway! Last week, Adobe dropped an announcement saying that AI-generated art was going to be made available as part of the company’s vast library of stock images, going so far as to say the field is “amplifying human creativity.” The company boldly says, repeatedly, stuff like they have “deeply considered these questions and implemented a new submission policy that we believe will ensure our content uses AI technology responsibly by creators and customers alike,” and that “generative AI is a major leap forward for creators, leveraging machine learning’s incredible power to ideate faster by developing imagery using words, sketches, and gestures.”

    Creators? Fuck off! These people aren’t creating anything! They’re punching words into a computer that has been fed actual art! And even if Adobe can, as they’re claiming, only release images that have been “properly built, used, and disclosed,” it still sucks! Gah! Attempting to make good on one of AI art’s issues—art theft—doesn’t absolve it from its others, like the fact nothing to do with these images or their creation has anything to do with art!

    Reaction among artists has of course been as wildly negative as any other AI art announcement over the past six months, with some criticising the company, while others resort to more traditional cries, encouraging people to seek out alternatives to Adobe’s products.

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    Luke Plunkett

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  • These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

    These 11 stocks can lead your portfolio’s rebound after the S&P 500 ‘earnings recession’ and a market bottom next year

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    This may surprise you: Wall Street analysts expect earnings for the S&P 500 to increase 8% during 2023, despite all the buzz about a possible recession as the Federal Reserve tightens monetary policy to quell inflation.

    Ken Laudan, a portfolio manager at Kornitzer Capital Management in Mission, Kan., isn’t buying it. He expects an “earnings recession” for the S&P 500
    SPX,
    +2.78%
    — that is, a decline in profits of around 10%. But he also expects that decline to set up a bottom for the stock market.

    Laudan’s predictions for the S&P 500 ‘earnings recession’ and bottom

    Laudan, who manages the $83 million Buffalo Large Cap Fund
    BUFEX,
    -2.86%
    and co-manages the $905 million Buffalo Discovery Fund
    BUFTX,
    -2.82%    ,
    said during an interview: “It is not unusual to see a 20% hit [to earnings] in a modest recession. Margins have peaked.”

    The consensus among analysts polled by FactSet is for weighted aggregate earnings for the S&P 500 to total $238.23 a share in 2023, which would be an 8% increase from the current 2022 EPS estimate of $220.63.

    Laudan said his base case for 2023 is for earnings of about $195 to $200 a share and for that decline in earnings (about 9% to 12% from the current consensus estimate for 2022) to be “coupled with an economic recession of some sort.”

    He expects the Wall Street estimates to come down, and said that “once Street estimates get to $205 or $210, I think stocks will take off.”

    He went further, saying “things get really interesting at 3200 or 3300 on the S&P.” The S&P 500 closed at 3583.07 on Oct. 14, a decline of 24.8% for 2022, excluding dividends.

    Laudan said the Buffalo Large Cap Fund was about 7% in cash, as he was keeping some powder dry for stock purchases at lower prices, adding that he has been “fairly defensive” since October 2021 and was continuing to focus on “steady dividend-paying companies with strong balance sheets.”

    Leaders for the stock market’s recovery

    After the market hits bottom, Laudan expects a recovery for stocks to begin next year, as “valuations will discount and respond more quickly than the earnings will.”

    He expects “long-duration technology growth stocks” to lead the rally, because “they got hit first.” When asked if Nvidia Corp.
    NVDA,
    +6.14%
    and Advanced Micro Devices Inc.
    AMD,
    +3.69%
    were good examples, in light of the broad decline for semiconductor stocks and because both are held by the Buffalo Large Cap Fund, Laudan said: “They led us down and they will bounce first.”

    Laudan said his “largest tech holding” is ASML Holding N.V.
    ASML,
    +3.79%    ,
    which provides equipment and systems used to fabricate computer chips.

    Among the largest tech-oriented companies, the Buffalo Large Cap fund also holds shares of Apple Inc.
    AAPL,
    +3.09%    ,
    Microsoft Corp.
    MSFT,
    +3.88%    ,
    Amazon.com Inc.
    AMZN,
    +6.63%
    and Alphabet Inc.
    GOOG,
    +3.91%

    GOOGL,
    +3.73%    .

    Laudan also said he had been “overweight’ in UnitedHealth Group Inc.
    UNH,
    +1.77%    ,
    Danaher Corp.
    DHR,
    +2.64%
    and Linde PLC
    LIN,
    +2.25%
    recently and had taken advantage of the decline in Adobe Inc.’s
    ADBE,
    +2.32%
    price following the announcement of its $20 billion acquisition of Figma, by scooping up more shares.

    Summarizing the declines

    To illustrate what a brutal year it has been for semiconductor stocks, the iShares Semiconductor ETF
    SOXX,
    +2.12%    ,
    which tracks the PHLX Semiconductor Index
    SOX,
    +2.29%
    of 30 U.S.-listed chip makers and related equipment manufacturers, has dropped 44% this year. Then again, SOXX had risen 38% over the past three years and 81% for five years, underlining the importance of long-term thinking for stock investors, even during this terrible bear market for this particular tech space.

    Here’s a summary of changes in stock prices (again, excluding dividends) and forward price-to-forward-earnings valuations during 2022 through Oct. 14 for every stock mentioned in this article. The stocks are sorted alphabetically:

    Company

    		 Ticker

    		 2022 price change

    		 Forward P/E

    		 Forward P/E as of Dec. 31, 2021
    Apple Inc.

    		 AAPL,
    +3.09%         		-22%

    		 22.2

    		 30.2
    Adobe Inc.

    		 ADBE,
    +2.32%         		-49%

    		 19.4

    		 40.5
    Amazon.com Inc.

    		 AMZN,
    +6.63%         		-36%

    		 62.1

    		 64.9
    Advanced Micro Devices Inc.

    		 AMD,
    +3.69%         		-61%

    		 14.7

    		 43.1
    ASML Holding N.V. ADR

    		 ASML,
    +3.79%         		-52%

    		 22.7

    		 41.2
    Danaher Corp.

    		 DHR,
    +2.64%         		-23%

    		 24.3

    		 32.1
    Alphabet Inc. Class C

    		 GOOG,
    +3.91%         		-33%

    		 17.5

    		 25.3
    Linde PLC

    		 LIN,
    +2.25%         		-21%

    		 22.2

    		 29.6
    Microsoft Corp.

    		 MSFT,
    +3.88%         		-32%

    		 22.5

    		 34.0
    Nvidia Corp.

    		 NVDA,
    +6.14%         		-62%

    		 28.9

    		 58.0
    UnitedHealth Group Inc.

    		 UNH,
    +1.77%         		2%

    		 21.5

    		 23.2
    Source: FactSet

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    The forward P/E ratio for the S&P 500 declined to 16.9 as of the close on Oct. 14 from 24.5 at the end of 2021, while the forward P/E for SOXX declined to 13.2 from 27.1.

    Don’t miss: This is how high interest rates might rise, and what could scare the Federal Reserve into a policy pivot

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