Every tech company, if not already deeply involved, has plans for artificial intelligence. Even markets that people thought would find it difficult to adapt operations to the new technology have made great strides in recent years. Creative software makers have certainly benefited in this regard as companies now use artificail intelligence to speed up processes.

Adobe Systems Inc. (NASDAQ:ADBE) is one of the most notable players in this space. Its flagship product, Creative Cloud, enables individuals, small and medium-sized businesses and enterprises to create, publish, promote and monetize their digital content.The company launched Adobe Sensei, a unified artificial intelligence and machine learning platform that integrates all the features in the company’s creative cloud to improve user experience, in 2016.

Content creators are now using artificial intelligence and machine learning technologies to speed up the editorial process. In fact, according to leading video editing service firms, artificial intelligence and machine learning could soon be doing most of the work in content creation.

Companies are now adopting these technologies to keep up with the demands of streaming services. For instance, Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube embraced artificial intelligence and deep learning in 2016, a move that caught many content creators by surprise. Most creators have since adapted their services to accomodate the technology.

This could also explain the increasing demand in Adobe’s creative cloud services as subscription numbers continue to soar. This has boosted the company’s revenues as well as profit margins.

Adobe’s top and bottom-line improvements have had a major impact on its market value over the last three years.

Shares of Adobe are up 36% year to date, making it one of the best-performing tech stocks in a period that has been marked by high volatility.

Adobe is one of the few companies to have carried last year’s stock market rally into 2018, significantly resisting a major decline that took the market by surprise in February. This has resulted in the stock gaining 75% over the last 12 months and more than 200% since February 2016.

Yet even with such a massive rise in stock price, the company’s valuation multiple in terms of price-earnings has continued to fall. In February 2016, Adobe’s shares traded at a price-earnings ratio of about 65 times. It is now down to 56 times.

While a price-earnings ratio of 56 times might appear high to some investors, the company is, in fact, trading at a discount when compared with the average prior to 2016. At one point, Adobe had a price-earnings ratio of 145 times and averaged well over 100 times between January and July 2015.

At the time, Adobe was making some key adjustments to its business model. It had just introduced Creative Cloud a couple of years earlier, which ushered in what has since proved to be beneficial for the company.

Adobe’s revenue has rallied 76% since 2015, while its bottom line has been one of the factors that contributed to a lower price-earnings ratio. The company’s net income is up 531% since January 2015. This reflects a better growth margin compared to the top line, which became possible after the introduction of a subscription-based model.

The company’s creative cloud subscriptions nearly doubled between 2015 and 2017, rising from about 6.17 million to 12 million according to Statista. The number of subscribers to the company’s lead product is expected to reach approximately 20 million by 2024. But based on the way the company has been beating expectations in recent years, this could well turn out to be an underestimation.

One of the biggest hurdles in providing creative software is a certain level of expertise is required to be able to use it well. This limits the number of people that can use it and, thus, the revenue potential. With the introduction of Sensei, however, using Adobe’s creative cloud services could become easier. This will certainly boost its revenue potential as its addressable market continues to expand.

Disclosure: I have no positions in the stocks mentioned in this article.

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