Adobe’s AI Strategy Could Outperform Nvidia Through 2028
Over the past three years, Nvidia has dominated global markets as the backbone of the artificial intelligence revolution. Its GPUs power nearly every major generative AI system in use today, helping transform industries from finance to healthcare. Yet analysts now believe another American giant—Adobe Systems—may be better positioned to deliver stronger returns through 2028.
Nvidia: A Market Leader Facing New Headwinds
Nvidia’s explosive run since the release of ChatGPT in 2022 has been historic. The company’s valuation surged past $4 trillion as demand for its AI accelerator chips fueled record-breaking growth. Its data center revenue jumped 73% year-over-year in early 2026, and earnings per share grew by more than 50% when adjusting for inventory write-downs tied to export bans.
Despite these impressive figures, competition is catching up. Advanced Micro Devices (AMD) has introduced GPUs with superior memory capacity, a key bottleneck in AI training. Meanwhile, major U.S. tech companies—including Amazon, Google, and Microsoft—are investing in custom silicon to reduce reliance on Nvidia. These pressures, combined with a lofty forward P/E ratio near 40, suggest the stock’s long-term upside could be constrained.
Adobe: Undervalued and AI-Integrated
While Nvidia has been the symbol of AI’s hardware boom, Adobe is quietly reshaping the software side of the industry. Its Creative Cloud remains the global standard for professionals in design, photography, and video. Despite fears that generative AI could diminish demand for its tools, Adobe has instead embraced the technology through Adobe Firefly, its proprietary AI model trained on licensed stock content.
Firefly now integrates seamlessly into Creative Cloud, boosting productivity for creative professionals and attracting a surge of new users. The company reported a 30% year-over-year increase in first-time subscribers last quarter, driven in part by Firefly adoption. Adobe also achieved double-digit growth in recurring revenue, with management projecting AI-related revenue to more than double this year.
Importantly, Adobe’s subscription model generates steady free cash flow, which the company reinvests into share buybacks—shrinking its float and increasing earnings per share. With the stock down more than 40% from its 2024 high, Adobe trades at just 17 times earnings, far below Nvidia’s multiple, suggesting significant upside potential.
Why This Shift Matters for the U.S. AI Market
The divergence between Nvidia and Adobe illustrates a broader truth about the U.S. AI economy: hardware may have led the first wave, but software could dominate the next. As generative AI becomes embedded in everyday workflows, companies like Adobe that fuse creativity with automation may capture value more sustainably than chipmakers battling price wars and custom in-house designs.
The Investor’s Dilemma
For American investors, the question is not whether AI will continue to grow, but which side of the ecosystem—hardware or software—will deliver better long-term returns. Nvidia remains critical infrastructure, but Adobe may offer a rare chance to buy into a high-margin, cash-generating business trading at a discount, with AI acting as a growth accelerator rather than a threat.
So the big question is: Will Adobe’s bold AI strategy make it the unexpected winner over Nvidia in the race to define the future of U.S. artificial intelligence?
