Will AI help or hinder Adobe?

Hey there,

This week, Adobe slips after a soft sales forecast, McDonald’s dips after continued boycotts in the Middle East, and Boeing’s crisis continues. 

💡 But first, the macro wrap-up:

Stocks remained steady throughout the week, until yesterday’s US producer prices came in hotter than expected at 0.6%, causing stocks to dip. The S&P 500 is down 0.6% this week.

Adobe’s tumble 📉

Good earnings, bad result: Despite outperforming its earnings-per-share by $0.10 and exceeding revenue by $40m, shares are down 10% after last night’s Q1 fiscal earnings. 

• Help or hinder: It seems Wall Street is still deciding whether AI text-to-video platforms will help or hinder the stock. Adobe will work with OpenAI on Sora, but also intends to create its own AI video platform. 

• Adobe abandoned Figma: Adobe abandoned its $20bn acquisition of design software startup Figma, after U.K. regulators found competitive concerns. Adobe had to shell out a whopping $1bn termination fee to Figma.

McDonald’s slips 🍟

Yearly low: Shares in McDonald’s are down 3%, hitting their lowest point of the year, after its CFO stated international sales will fall year-on-year this current quarter.

• Middle Eastern conflict: McDonald’s missed Wall Street estimates for Q4 sales, largely due to boycott campaigns against Western brands over perceived pro-Israeli stances in the Israel-Hamas conflict.

• Bigger burgers: However, the fast food giant will be producing larger burgers, offering more chicken options, and improving the quality of its coffee in selected markets to keep up with shortening demand. Will it be enough to turn the stock around and get investors lovin’ it?

Boeing’s crisis continues 🛬

Strong headwinds: Since one of Boeing’s aircraft doors flew off mid-flight, the aviation regulator has paused certification of its latest 737 jets. Delta expects deliveries could be delayed until 2027.

• Dissatisfied customers: Major airlines like Alaska and Southwest rely on Boeing's 737 jets, but are now having to cut their flights and reduce forecasts due to the delays. It’s not a good look for Boeing. 

• Looking elsewhere: Reports state United Airlines, a Boeing customer, will now turn to major rival Airbus. Boeing shares are down another 8% this week, making it one of the S&P 500’s worst performers this year.

What have we learnt this week? 🤓

• Adobe X OpenAI: During Thursday’s earnings call, Adobe stated it’d be working on Sora, OpenAI’s text-to-video project. AI remains central to Adobe’s future plans.
• Western brands are being boycotted: McDonald’s isn’t the only Western brand experiencing a Middle Eastern boycott; Starbucks has also had its share price affected.
• Boeing deliveries have hit a two-decade low: Boeing’s loose door is what sparked the FAA to investigate its operations. Since, numerous problems have been found.

Stock announcements 👀

Here are the key earnings dates to look out for next week:

• Wednesday 20th March: Micron Technology
• Thursday 21st March: Accenture, FedEx, Nike

Author: James Ashoo

Find these stories interesting? Get three fresh stories just like this delivered to your inbox every Friday.

Just sign up for The Weekly Scoop and we’ll handle the rest!

*Figures correct as of 15th March 2024.

Past performance does not guarantee future results. Capital at risk when investing.

This content is for educational purposes only. Shares does not provide investment advice. If you are unsure about anything, please seek advice from an authorised financial advisor.