Adobe is making big changes to keep up with artificial intelligence, but investors aren’t sold.
Chief Financial Officer Dan Durn pinpointed AI developments as the main driver behind the software company’s higher-than-expected revenue in the fiscal second quarter, which allowed management to raise its full-year outlook. “I think it’s a proof point that we’re really leading the creative AI revolution,” Durn said. Investors don’t appear so sure. Shares ebbed 1.5%, to $407.50, in postmarket trading Thursday. Adobe management believes AI can open the door to a new era of growth, but the rapidly evolving technology requires the company to make some significant pivots. Adobe on Thursday raised its fiscal 2025 sales outlook to $23.5 billion to $23.6 billion, up from prior guidance of $23.3 billion to $23.55 billion. It also increased its expectations for adjusted earnings per share by 20 cents, to a range of $20.50 to $20.70. Revenue in the second quarter rose 11%, to $5.87 billion, beating the high end of the guidance range it shared in March. Analysts surveyed by FactSet forecast revenue of $5.8 billion. Adobe also beat expectations in the first quarter, which it reported in March, but shares dropped after the report. Analysts said investors are worried Adobe can’t keep up with competitors and that generative AI could eventually take away from its business if it doesn’t move fast enough to keep up. Adobe posted a profit of $1.69 billion, or $3.94 a share, in the quarter ended in May, compared with $1.57 billion, or $3.49 a share, a year earlier. Stripping out certain one-time items, adjusted per-share earnings were $5.06, ahead of the $4.97 forecast by analysts, according to FactSet.

The Swiss stock market benefited from increased risk aversion on Thursday. Defensive heavyweights Roche (+1%), Nestlé (+0.3%) and Novartis (+1.1%) were in demand and kept the leading index narrowly in positive territory. The SMI rose by 0.1 per cent to 12,323 points. Among the 20 SMI stocks, there were twelve losers and eight gainers. A total of 18.27 (previously: 15.65) million shares were traded. Following their significant gains of the previous day, Logitech now moved in the opposite direction with negative US cues and brought up the rear with losses of 2.6 per cent. Insurance stocks were weak across Europe after analysts at Barclays downgraded the sector. In Switzerland, Zurich Insurance declined by 1.6 per cent, Swiss Re by 3.2 per cent and Swiss Life by 0.8 per cent. UBS (-1.1 per cent) again suffered losses due to the stricter capital requirements. According to analysts at Keefe, Bruyette & Woods, however, the bank may continue to buy back shares worth up to USD 3 billion per year. Among small caps, the shares of biotechnology company Molecular Partners climbed 9.6 per cent following positive trial results.

Europe
The European stock markets closed slightly lower on Thursday as geopolitical and trade tensions led investors to turn to safe havens such as gold and the yen. The Stoxx Europe 600 index fell by 0.3% to 549.8 points. In Paris, the CAC 40 and SBF 120 were down by 0.1% each. The DAX 40 lost 0.7% in Frankfurt, while the FTSE 100 gained 0.2% in London. CLARIANE (+15.4%): the operator of retirement homes and clinics announced the sale of its Petits-fils network to Crédit Agricole Santé & Territoires, for a gross value of €345 million. The deal, which is expected to be finalised by the end of September, will enable Clariane to complete the strengthening of its financial structure. Crédit Agricole lost 0.4%. AIR FRANCE-KLM (-7.3%), LUFTHANSA (-3.7%), IAG (-2.2%): the air transport sector was hit on Thursday by the crash of a Boeing 787 in India and by a rebound in crude oil prices. VUSION (+1.4%): at the VivaTech trade fair, the electronic labels specialist announced a partnership with the retailer Carrefour to deploy its EdgeSense technology. This technology combines connected shelf rails, computer vision, artificial intelligence (AI), electronic labels and ultra-precise data.

United States
Wall Street closed slightly higher on Thursday after initial losses. The Dow Jones index settled 0.2 per cent higher at 42,968 points and recovered from the day's lows. The index was weighed down primarily by Boeing following the crash of an Air India aircraft. The S&P 500 Index recorded a gain of 0.4 per cent and the Nasdaq Composite added 0.2 per cent. According to preliminary figures, there were 1,569 (Wednesday: 1,307) price gainers and 1,184 (1,463) price losers on the Nyse. A total of 85 (61) stocks closed unchanged. Among the individual stocks, Boeing shares slumped by 4.8 per cent after an Air India Boeing 787 crashed shortly after take-off in the city of Ahmedabad. The share price of engine manufacturer GE Aerospace declined by 2.3 per cent. In contrast, Oracle shares climbed 13.3 per cent. The company had provided an optimistic outlook when presenting its business figures. The takeover by Biontech catapulted Curevac up by 37.6 per cent. Gamestop's share price plummeted by 22.5 per cent after the retailer specialising in video games announced the issue of a convertible bond. Oxford Industries plunged 13.4 per cent after lowering its outlook.

Asia
The financial markets in East Asia were shaken on Friday by news of extensive Israeli attacks on Iranian nuclear and military facilities. Oil prices reacted most strongly to the development. They are currently shooting up by around 8 per cent in view of the risk of production losses in the region as a result of the escalation. Brent oil costs 76 dollars per barrel, the highest price since January. While Israel is talking about a pre-emptive strike, justified by Iran's continued work on its nuclear programme, Iran has already announced counterattacks. Prices on the stock markets fall, albeit rather moderately in view of the strong reaction of oil prices. In Tokyo, the Nikkei 225 index lost 1.1 per cent to 37,738 points. In Seoul, the drop amounted to 1.4 per cent. In Shanghai and Hong Kong, the market barometers fell by 0.7 per cent. Oil stocks are being bought on the stock markets. Inpex climbed by 3.4 per cent in Tokyo, CNOOC by 2.2 per cent in Hong Kong and Woodside by 7.3 per cent in Sydney.

Bonds
The 10-year yield on U.S. Treasuries slipped, after the attack on Iranian nuclear facilities spurred investors to pare down risk. The US government issued USD 22 billion worth of 30-year government bonds on Thursday. At the closing bell on Wall Street, the yield on 30-year US government bonds had lost 7 basis points to 4.840 per cent. Producer prices rose less strongly in May than economists had expected. This fuelled the speculation surrounding interest rate cuts.

Analysis
Rating Zurich Insurance: Barclays downgrades to Equal Weight (OW) - target CHF 580 (595)
Rating Burkhalter: UBS launches with Neutral - target CHF 122
Rating Swiss Re: Barclays downgrades to Underweight (EW) - target CHF 128 (136)