By Zaheer Kachwala
(Reuters) -Photoshop maker Adobe (NASDAQ:ADBE) raised its revenue forecast for fiscal 2024 on Thursday as more businesses and consumers take to its artificial intelligence-powered editing tools amid signs of an easing economy.
Shares of the San Jose, California-based company jumped more than 16% in extended trading.
The company now expects revenue of between $21.40 billion and $21.50 billion, compared with its prior forecast of between $21.30 billion and $21.50 billion. Analysts on average expected $21.46 billion, according to LSEG data.
Adobe's outlook reflects that its AI efforts are paying off as clients hike spending on its software products such as Premiere Pro, Animate and After Effects, which are used by creative professionals in a variety of fields.
The company said in April it plans to incorporate an AI tool to generate images in its popular Photoshop software, amid heating competition from the likes of OpenAI, Stability AI and Midjourney.
Adobe also raised its forecast for full-year adjusted earnings per share to a range of $18 and $18.20 per share from $17.60 and $18 per share it expected earlier.
"It appears that their (Adobe's) business is thriving in spite of the crowding out by AI that is dragging down those peers. We believe that leaves Adobe as the best-positioned large-cap software company," said Gil Luria, research analyst at D.A. Davidson.
The company reported revenue of $5.31 billion in the second quarter, beating estimates of $5.29 billion.
The company reported digital media revenue of $3.91 billion, above estimates of $3.89 billion.
Adobe has developed its own AI image generation tool called Firefly which it trains on data it has the rights to, at a time of heightened concern regarding data privacy and copyright around AI-created content.
On an adjusted basis, the company earned $4.48 per share in the quarter, compared with estimates of $4.39 per share.