12:22 PM EDT, 09/13/2024 (MT Newswires) -- Adobe's (ADBE) Firefly usage is expected to drive near-term incremental growth, BofA Securities said in a Friday note.

BofA highlighted Adobe's generative machine learning model and said it was "encouraged by Firefly generations" which rose by 3 billion quarter-over-quarter in Q3. BofA also said integrating Firefly into individual apps should boost "top-of-funnel conversion" rates.

"It is notable that Adobe is driving meaningful AI generation and running training and inferencing on large scale Firefly models, while delivering healthy margin expansion," BofA said, adding that Firefly's generative output is anticipated to boost digital annual recurring revenue through improved acquisition, conversion, and generative credits.

The company's Q3 results and outlook were "somewhat mixed, though healthy overall," BofA said.

"The quarter benefitted from some deals pulled forward from Q4 in the Document Cloud. However, Q4 upside was more balanced across Creative and Documents cloud," BofA said.

BofA maintained a buy rating on Adobe with a price target of $640, adding that it is one of the few companies advancing generative AI volume and scale.

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