Adobe Announces Generative AI ‘Firefly’ Program And Wall Street Flocks Like A Moth To A Flame

Key takeaways

• The digital media giant has announced AI generative tools will be added to its suite of apps
• Adobe stock rose 3.1% after the announcement, buoyed by a strong Q1 earnings report last week
• Things are looking up for Adobe stock after a challenging year for the tech sector, but regulatory questions remain over its planned $20bn takeover of Figma

Adobe has revealed its latest play in AI with its new Firefly suite, which is set to integrate into existing Adobe products like Photoshop and Illustrator. After an impressive product demo at the latest Adobe Summit hosted by CTO of digital media Ely Greenfield, the share price quickly rose 3.1% by the end of Tuesday.

AI image generators haven’t been without controversy since the likes of Dall-E and Midjourney exploded onto the scene, preferring to ask for forgiveness rather than permission when it came to copyrighted images.

With Adobe’s hat firmly in the ring, the future of generative AI imagery could take an exciting new direction – one that doesn’t run on stolen artwork.

With every tech company scrambling to come out on top with artificial intelligence, everyone will wonder: are we seeing the birth of an Adobe renaissance era, or is the talk overblown?

Read on for the full lowdown.

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What has Adobe announced?

At the Adobe Summit in Las Vegas on Tuesday, the digital media platform announced it would be introducing its generative AI suite, Adobe Firefly, into existing Adobe products. The product demo included the different variations of a whole or part of an image that AI could generate.

Adobe Express, Photoshop and Illustrator will be among the first of the company’s existing products to benefit, with the AI tools open for beta testing this week. “With Firefly, Adobe will bring generative AI-powered ‘creative ingredients’ directly into customers’ workflows,” said David Wadhwani, Adobe’s president of Digital Media Business in a statement.

Adobe will also partner again with integrated circuits company Nvidia, which is launching its own Picasso AI platform that some of Adobe Firefly’s models will host. The two companies will further develop Adobe’s Creative Cloud suite and Nvidia’s Picasso cloud service for third-party developers.

The Adobe suite faces stiff competition from OpenAI’s Dall-E and Midjourney’s image generators launched last year. But Adobe might have the edge over these tools thanks to its copyrighted content.

The AI imagery elephant in the room

While the AI image models on the market have fascinated users, one resounding issue is their use of copyrighted images to train the AI models.

The founder of AI image generator Midjourney, David Holz, has openly admitted that its AI is trained on millions of images used without permission. No legal framework exists around AI image generators. However, that didn’t stop Getty from suing AI art machine Stable Diffusion for allegedly using over 12 million of its stock images without permission.

A litigation tidal wave could be coming around AI and copyrighted images. So, more prominent players like Adobe and Getty, who both own image licensing platforms, would use their stock image libraries to train AI models without being hounded by IP issues.

Adobe also has a reputation and investors to think of. Any wrong move wouldn’t be taken kindly by Wall Street and could potentially damage the brand.

Adobe plans on tackling this issue head-on by introducing a ‘do not train’ tag that would allow all image creators and photographers to keep their content away from AI training models. It also intends to compensate creators whose images train Adobe Firefly, with more details coming in due course.

All of these actions bode well for the longevity of the AI model. Given Adobe is a titan in the digital content creation industry, investors will think the company is well-placed to capitalize on AI imagery without running into the same legal trouble smaller AI companies face.

What was Wall Street’s reaction?

The AI news landed favorably with investors. Adobe stock prices rose 3.1% by the end of trading, with Nvidia also benefiting from the announcement with a 1.2% share price gain.

Things are looking good at Adobe HQ right now. Its latest earnings report for Q1 2023 showed a 9% growth in revenue year on year, beating analyst expectations by a $40m margin. The share price rose 5% at the news last week.

Like the rest of the tech sector, Adobe suffered from the stock market crash last year, and its share price is still half its all-time high. But Wall Street is happy enough with the double whammy of a better-than-expected earnings report and another tech company jumping into the AI ring.

Could that change this year? It’s possible if the regulators get their wish.

Is anything else affecting Adobe stock prices?

Adobe’s eye-watering $20bn takeover of Figma is now facing regulatory scrutiny, with the EU looking into the proposed deal and the US Department of Justice apparently planning on slapping Adobe with an antitrust lawsuit.

If the deal doesn’t go ahead, it could be bad news for the stock price. Just the threat of a DoJ lawsuit made the stock slide 7% on the day.

Adobe may be up now, but its overall revenue growth is slowing from a high of 23% in 2021. Figma is growing at an astronomical speed, doubling its revenue in 2022 from $200m to $400m.

Adobe wants a piece of the Figma pie, but if regulators block the deal, then investors may be left hungry for Adobe’s revenue figures to increase.

The bottom line

Not only is Adobe getting involved in the AI wars, but it’s also learned from fledgling AI companies how best to handle the thorny issue around stolen images and copyright.

This sets it up nicely to become a significant player in the space. We could see some Adobe stock price increases if the platform is as popular as investors think it will be.

Adobe could be shaping itself up for a robust year if it can also vault over the regulatory hurdles it faces with the Figma acquisition.

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