Apple AAPL and Adobe ADBE are infusing AI into their core offerings. While Apple is infusing Apple Intelligence into its core operating systems that power iPhone, iPad, Mac and Wearables, Adobe is incorporating AI into its software solutions for creators, marketers and business professionals.
According to IDC, global spending on AI-supporting technologies, including infrastructure, will surpass $758 billion by 2029. Gartner expects worldwide spending on AI to be $2.52 trillion in 2026, a 44% increase over 2025. Spending on AI Software is expected to be $452.46 billion in 2026, trailing AI infrastructure-related spending of $1.37 trillion and AI services-related spending of $588.65 billion. The spending projections bode well for both Apple and Adobe.
However, both stocks are playing catch-up in the AI domain against the likes of Microsoft, Amazon and Alphabet. In the trailing 12-month period, Adobe shares have lost 41.1%, underperforming Apple’s appreciation of 15.5%.
Apple and Adobe Stock’s Performance
Image Source: Zacks Investment Research
So, Apple or Adobe, which has an edge under the current scenario?
The Case for Apple Stock
Apple has witnessed strong shipments of its devices in markets where Apple Intelligence has been available. The company believes growing adoption of Apple Intelligence among developers will drive strong demand for their apps. Since the launch of Apple Intelligence, the company introduced dozens of features, including writing tools and cleanup and made it available in 15 languages. Visual intelligence is helping users learn and do more with their content on iPhone. It is helping users search faster, take action and answer questions across their apps.
Apple’s multi-year collaboration deal with Alphabet is now expected to be a key catalyst in boosting Apple Intelligence features. Under the agreement, the next generation of Apple’s foundation models will be based on Google’s Gemini models and cloud technology. Apple Intelligence features, including a more personalized Siri, will now be powered by Google models. The addition of Google models, including Gemini, is expected further boost the adoption of Apple models among app developers. Meanwhile, Apple Intelligence will continue to run on Apple devices and Private Cloud Compute.
Apple has been an outlier among “Mag 7” peers and hyperscalers in terms of AI infrastructure-related spending. The Google deal helps Apple conserve cash and generate strong free cash flow. The strong cash balance ($132.42 billion as of Dec. 27, 2025) is expected to help Apple focus more on developing hardware-oriented AI faster, privacy-first AI models, and AI-infra light footprint, driving up device sales.
The Case for Adobe Stock
Adobe’s ongoing AI push is helping in advancing the company’s footprint among business, creative and marketing professionals. Adobe now targets annualized recurring revenue growth of 10.2% for fiscal 2026, driven by an innovative AI-powered portfolio, the expanding adoption of enterprises and a large market opportunity.
Adobe is benefiting from strong demand for AI-powered Creative Cloud Pro and Acrobat, as well as AI-first products, Firefly and Acrobat AI Assistant. Through the new conversational and agentic interfaces in Adobe Reader, Acrobat and Express, ADBE is offering improved experiences to business professionals and consumer groups. Firefly models and applications like Photoshop, Illustrator and Premiere, which integrate third-party models, are gaining traction among Creators and Creative professionals. New solutions like Premiere mobile with YouTube integration and Photoshop mobile are helping creators develop content anywhere.
Adobe is benefiting from an expanding partner base and integrations with leading AI ecosystems, including Amazon Web Services, Azure, Google Gemini, Microsoft CoPilot and OpenAI. Adobe’s Firefly has a rich partner base that includes models from Google, OpenAI, Black Forest Labs, Luma, Runway, Topaz Labs and ElevenLabs.
Apple’s Earnings Estimate Revision Positive, ADBE’s Steady
The Zacks Consensus Estimate for Adobe’s fiscal 2026 earnings is pegged at $23.47 per share, unchanged over the past 30 days, indicating a 12.1% increase over fiscal 2025’s reported figure.
Adobe Inc. Price and Consensus
Adobe Inc. price-consensus-chart | Adobe Inc. Quote
The consensus mark for Apple’s fiscal 2026 earnings has increased by 3% to $8.41 per share over the past 30 days, suggesting 12.7% growth over fiscal 2025.
Apple Inc. Price and Consensus
Apple Inc. price-consensus-chart | Apple Inc. Quote
Valuation: Adobe is Cheaper Than Apple
While Apple shares are overvalued, Adobe is cheap, as suggested by the Value Score of D and B, respectively.
In terms of forward 12-month price/sales, Adobe shares are trading at 3.98X, lower than Apple’s 8.48X.
AAPL and ADBE Valuation
Image Source: Zacks Investment Research
Here’s Why Apple Has an Edge Over Adobe
Apple’s prospects are expected to benefit from its strong iPhone and Services business. Apple’s expanding AI footprint, thanks to the GOOGL collaboration, bodes well for growth prospects. These factors justify a premium valuation despite stiff competition in the smartphone and AI domains. Although Adobe’s expanding partner base and AI-related initiatives are key catalysts, the company’s minuscule AI revenues are a concern for investors.
Currently, Apple and Adobe have a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
