Adobe earnings, Arm shares jump post IPO, China lifts luxury stocks Adobe earnings, Arm shares jump post IPO, China lifts luxury stocks Adobe earnings, Arm shares jump post IPO, China lifts luxury stocks

Adobe earnings, Arm shares jump post IPO, China lifts luxury stocks

5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  Revenue outlook from Adobe last night fails to paint a picture of explosive generative AI growth. Arm concludes a successful IPO with a 25% gain on the first day of trading. European luxury stocks are on the move today on encouraging Chinese macro figures.


Key points in this equity note

  • Adobe earnings underscore Microsoft’s comments that generative AI sales will be gradual and not an explosion.

  • Arm IPO was a success with retail investors piling into Arm yesterday on the first day of trading pushing shares up 25%.

  • Better-than-expected macro figures out of China on top of policymakers cutting the reserve requirement for Chinese banks have lifted sentiment in commodities and European luxury stocks.

Adobe earnings: The AI rush is failing to turn into a gold mine

Given the strong promises of growth from generative AI there was a lot of attention of Adobe earnings last night as Adobe, providing creative and content software, is a sweet spot for capitalizing on the generative AI hype. The FY23 Q4 (ending 30 November) outlook on revenue was in line with estimates suggesting minimal impact on growth rates from the new AI features. Adobe announced that it will hike prices across products on 1 November and with additional fees for using AI features. Our interpretation of the Adobe earnings is that the generative AI hype is creating a gold rush into Nvidia GPUs but that commercialization will take much longer than what is priced in financial markets.

Arm IPO: Minimal float pulls retail investors into the stock

Arm shares rose 25% yesterday on its first day of trading cementing the positive vibes around the IPO which was significantly oversubscribed. Due to the small offering translating into roughly a 10% float retail investor participation in the actual IPO offering has been small. This likely generated a lot of demand from retail investors on the first day of trading which we can confirm at Saxo as Arm shares were fifth most traded globally in yesterday’s session. Our take on Arm remains that its valuation is quite stretched and is predicated on strong expectations that generative AI will structurally lift future growth for Arm.

Arm share price | Source: Saxo

China’s stabilisation lifts luxury stocks in Europe

As we wrote in our European Quick Take this morning, China’s economy is showing temporarily stabilisation with better-than-expected industrial output and retail sales in August. On top of that, the PBoC cut the reserve requirement for banks lifting growth sentiment spilling into strong bids in oil and iron ore markets. The positive risk sentiment out of China is also spilling over into European luxury stocks in today’s trading session with some the largest luxury stocks such as Richemont, LVMH and Christian Dior sitting in the top 10.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Business Hills Park – Building 4,
4th Floor, office 401, Dubai Hills Estate, P.O. Box 33641, Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.