Stanley Druckenmiller Dumped Nvidia And Dropped $20M on Adobe… Is He Already Second-Guessing?

Stanley Druckenmiller, the billionaire stock whisperer who’s made a name predicting market moves (and a few too many recessions), just made headlines by dumping his Nvidia shares and dropping a cool $20 million into Adobe. 

At first glance, this seems like a genius move—jumping into a company that’s pushing hard into artificial intelligence. But just like his “bubble bursting” predictions, things aren’t quite as simple as they seem.

Despite Adobe’s love affair with artificial intelligence (AI), investors aren’t exactly pumped over the company’s latest forecast. Turns out, Adobe’s AI push might need a little more time to marinate, and Wall Street (and retail investors) aren’t in the mood to wait.

Adobe’s third-quarter numbers painted a pretty picture, at least on the surface. The company pulled in $5.41 billion in revenue, beating the estimated $5.37 billion, and earnings per share (EPS) came in at $4.65, outpacing the $4.53 analysts were expecting. Solid, right? For a moment, Adobe seemed like it was living up to the hype. But then came the fourth-quarter guidance, and that’s where things took a turn.

In less time than it takes to refresh a portfolio page, Adobe’s stock dropped 9%, wiping out more than $21 billion in market value. It’s not that Adobe isn’t doing exciting things with AI—tools like Firefly are getting tons of attention. The problem is that Wall Street doesn’t care how many people are playing around with cool AI features unless it’s pumping dollars into the bottom line. And despite Adobe boasting over 12 billion uses of Firefly, the returns are disappointing to say the least.

Meanwhile, Druckenmiller’s stepping into the ring at a time when AI competition is hotter than ever. Adobe’s fighting off scrappy challengers like Stability AI and Midjourney, and the field is getting crowded. Investors were hoping that Adobe, with its iron grip on the creative software world—thanks to tools like Photoshop and Illustrator—would easily dominate the AI game. But now, the competition’s closer than ever, and Adobe’s advantage is looking thinner than a Spirit Airline seat.

(Source: Fox News)

To make matters worse, Adobe’s digital media division did report an 11% growth, clocking $4 billion in sales. Still, that’s not enough to keep investors calm. The company’s net new annual recurring revenue (NNARR) came in at $550 million, short of the expected $561.1 million. Translation? Adobe’s big AI dreams are still stuck in the idea stage while Wall Street wants those numbers in the bank.

Analysts are split. Michael Turrin from Wells Fargo thinks Adobe is doing well getting people to actually use its AI tools, but usage doesn’t pay the bills. On the other hand, Citigroup’s Tyler Radke pointed out that while Adobe’s document-processing software is exceeding expectations, its flagship AI-heavy creative tools are still dragging their feet when it comes to raking in the cash.

Druckenmiller might still have a shot at coming out on top with Adobe. But here’s the thing—right now, he’s put his chips on a company that’s still working out how to turn all that AI hype into actual money. At 34 times forward earnings and an EPS of $4.65, Adobe’s valuation is no small number—$230 billion, to be exact. That’s an expensive price tag for a company that’s still trying to prove its AI ambitions are more than just marketing hype.

Druckenmiller may be playing the long game, but Adobe needs to turn all those AI-powered Photoshop edits into some cold, hard revenue before investors lose patience. The competition is closing in, and time isn't exactly on Adobe's side.

Forget about Druckenmiller’s $20M bet on Adobe for a second—there’s an even bigger opportunity brewing right now, and it could be on the edge of something huge.

While Adobe’s AI ambitions have Wall Street pacing, our Stocks.News premium members have already scored a 96% gain from yesterday’s alert—and a short squeeze could be coming any moment.

With all this momentum, there’s still plenty of room for this stock to take off.

Don’t miss out on what could be the second half of this explosive run—click here to upgrade to premium and get ahead of the squeeze!

Stay focused, stay hungry. See you next time...

Stock.News does not have positions in companies mentioned.