Adobe (ADBE) is expected to outperform its software peers over the next 12 months, driven by "growing synergies" between its Experience Cloud and Creative Cloud businesses and the potential for generative artificial intelligence to boost revenue growth and investor sentiment, RBC Capital Markets said in a note Tuesday.

The firm said it is hosting a "virtual fireside chat" with Adobe President of Creativity and Productivity David Wadhwani to discuss the company's generative AI monetization strategy, AI-driven revenue opportunities, evolving pricing models and the expansion of its total addressable market across "enterprise and consumer segments" following its fiscal Q2 results.

While Adobe delivered solid fiscal Q2 results, " investor focus" shifted to the departure of Chief Financial Officer Dan Durn and the complexities of the company's annual recurring revenue guidance, the note said.

Despite near-term revenue headwinds from Adobe's "strategic" shift toward a freemium model and delayed price optimizations, the firm said AI-first annual recurring revenue, led by Firefly and Express, more than tripled year over year to over $500 million and added that generative AI will serve as a long-term catalyst for revenue growth through 2026, according to the note.

RBC Capital Markets maintained an outperform rating on Adobe with a price target of $285.

Shares of Adobe were down more than 2% in Wednesday trading.

Price: 202.02, Change: -5.30, Percent Change: -2.56