01:07 PM EDT, 06/10/2024 (MT Newswires) -- Adobe's (ADBE) performance during fiscal Q2 still faced soft spending, but the second half is expected to offset that as spending budgets get replenished and integration of artificial intelligence takes shape, Morgan Stanley said Monday.

The company is scheduled to release fiscal Q2 results June 13. After seeing soft spending at enterprise software companies like Salesforce (CRM), Workday (WDAY) and others, investors were concerned if Adobe faced the same sentiment during Q2. However, its partners told the brokerage the AI integration could invigorate interest.

Partners didn't see the usual increase in the back half of the quarter as enterprises are in a wait-and-see approach as it relates to artificial intelligence, making the Morgan Stanley "a bit more nervous" around the growth of Digital Experience business.

"While Q2 remains a difficult set-up with pricing headwinds in Digital Media and enterprise software malaise in Digital Experience, given the weak investor sentiment, ramping product cycles and easing comps in H2, it may prove a clearing event," the firm said.

Morgan Stanley had an overweight rating and $660 price target on Adobe.

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