BUSINESS

Crypto’s latest bear cycle is a mere blip when compared with the existential threat AI now poses to traditional software services, says Ravi Tanuku, CEO of KRAKacquisition Corp.

This quarter made one thing clear.Adobe’s (ADBE) AI story now has real revenue behind it.For months, investors debated whether generative AI would expand the business or simply add costs with minimal returns.That debate is starting to shift with the company’s first report of AI-first ARR.Adobe is down roughly 37% this year, which is a sharp pullback for the company that has long been one of software’s most consistent winners.Now, investors are asking whether this is the start of a second-growth leg or just early traction that isn’t big enough to matter yet.Valuation snapshotMarket Cap: $97.4 billionEnterprise Value: $97.1 billionShare Price: ~$320Analysts’ Avg Target Price: $328.19 (~3% implied upside)2-Year Annual Expected EPS Growth: 12.2%Forward P/E Ratio: 10.0xStats from TIKR.com.AI revenue is starting to show upAI is now generating real revenue with the announcement of $125 million in ARR for the first quarter across Creative Cloud, Express, and adjacent workflows.But in the context of the business, it’s still small.Adobe’s Digital Media segment generates more than $17 billion in ARR, which means AI is contributing less than 1% of the total today.Even if first-quarter results were annualized, AI would still be contributing less than 5% of ARR. AI can become a big opportunity for the company, but the impact is still early.More AI Beneficiaries:Morgan Stanley sets jaw-dropping Micron price target after eventBank of America updates Palantir stock forecast after private meetingMorgan Stanley drops eye-popping Broadcom price targetSo far, the core business is still holding up, with Digital Media seeing segment revenue growth of 12% and net new ARR of $432 million. That helps ease concerns that AI competitors are already pressuring retention or seat growth.Management pointed to solid retention, upsell, and paid conversion trends across Creative Cloud and Document Cloud, suggesting the installed base remains resilient even as competition builds.CEO departure adds new uncertaintyLeadership uncertainty is also entering the story.Adobe said longtime CEO Shantanu Narayen will step down once a successor is named, a move that comes as the company navigates AI disruption.In his message to employees, Shantanu Narayen framed the decision as a natural handoff after nearly two decades leading the company, saying he plans to “transition from my role as CEO of Adobe after over 18 years in the job.”The timing looks strategic as Adobe is entering a new phase shaped by AI, new workflows, and changing competition.Narayen emphasized that “the next era of creativity is being written right now,” suggesting the company wants new leadership in place to guide that next chapter.“Investors will likely focus on whether incoming leadership maintains a balance between disciplined execution and aggressive AI investment,” Emarketer analyst Grace Harmon said.That adds another layer to the debate, as investors now have to weigh not just AI monetization, but whether new leadership can execute on it.Guidance raise meets growing skepticismAdobe increased its full-year outlook, now expecting FY2026 revenue of $26.1 billion to $25.9 billion and non-GAAP EPS of $23.30 to $23.50.The raise suggests that, at least so far, the company is managing to drive growth while maintaining margin discipline.But the reaction from analysts shows the debate is far from settled.

One way Adobe will increase revenue is to convert more free users into paying subscribers. ullstein bild via Getty Images

Barclays recently downgraded the stock to Equal Weight and cut its price target to $275, pointing to weaker-than-expected net new ARR and pressure on pricing as freemium AI tools like Firefly and Express expand usage but weigh on average revenue per user.Oppenheimer, while maintaining a more neutral stance, said the business remains stable but flagged concerns around pricing power, competitive pressure, and uncertainty tied to the upcoming CEO transition.Several firms, including Citi, Jefferies, and UBS, have lowered price targets in recent months as software multiples compress and expectations around AI are reset. Goldman Sachs initiated coverage with a Sell rating, citing pressure on high-end users and limited exposure to lower-priced tiers, where demand is growing faster.Other analysts have flagged slowing Digital Media growth and tougher competition in creative tools, suggesting near-term catalysts may remain limited.What could drive Adobe higherAI-first products scale beyond the $125M ARR base into a meaningful revenue layerFirefly and premium AI features support pricing power in Creative CloudExpress and AI tools convert more free users into paid subscribersDigital Media net new ARR holds steady, easing slowdown concernsFY2026 guidance proves Adobe can invest in AI while maintaining marginsWhat could go wrong for AdobeAI revenue remains too small to offset competition from Canva and AI-native toolsProduct and infrastructure costs weigh on marginsSmall business demand weakens, slowing seat growthAI features cannibalize higher-value subscriptions instead of lifting ARPUInvestor patience fades if AI monetization ramps too slowlyKey takeaway for investorsAdobe is starting to show that AI can contribute to growth, but the market is still debating whether that contribution will be large enough to sustain margins and reaccelerate the business.What matters now:How fast AI ARR grows (proves monetization is real)Whether Express converts free users into paying customers (key to scaling AI revenue)Whether Creative Cloud and Document Cloud stay resilient (protects the core business)Related: Longtime oil analyst sends dire oil price message

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Exxon Mobil (XOM) had a big day Friday, and the easy explanation was oil. Crude prices pushed higher again as supply fears stayed in focus, putting the major energy names back on traders’ screens.Exxon came into this rally with stronger company-specific momentum than many of its peers. The stock already had support from record production, a large shareholder-return program, and a fresh set of growth headlines tied to Guyana and Venezuela.The company’s latest earnings report laid the groundwork. In late January, Exxon posted fourth-quarter 2025 earnings of $6.5 billion and adjusted earnings of $7.3 billion. Cash flow from operations came in at $12.7 billion, while full-year earnings reached $28.8 billion.More ExxonGoldman Sachs resets price target on energy giant156-year-old energy giant to pay $17 billion in dividends as oil spikes to $110The world’s biggest gas field matters just as much as oil right nowExxon also gave investors what they usually want from the name. Management raised the quarterly dividend to $1.03 per share and extended its planned $20 billion annual buyback pace through 2026.Production is a big part of why the stock still has room to attract buyers in a stronger oil tape. Exxon said full-year 2025 output reached 4.7 million oil-equivalent barrels per day, the highest level in more than 40 years.Exxon’s recent catalyst stack is giving investors more to watchIn March, Exxon said it was accelerating work in Guyana as higher oil prices improved project economics there. That keeps one of the company’s most important long-term growth assets right at the center of the investment case.The company also sent a team to Venezuela to evaluate oil and gas opportunities there. That does not create an immediate earnings catalyst, but it does reopen another large international angle tied to Exxon’s portfolio.Those two developments add depth to the rally. This is not just a stock moving higher because crude is squeezing shorts. Exxon still has real long-cycle growth options, and the market is paying attention to them again.Exxon still has room to play offenseOne reason Exxon keeps getting the benefit of the doubt is that it still has the balance-sheet flexibility to keep spending and returning cash at the same time. The company ended 2025 with $10.7 billion in cash, a debt-to-capital ratio of 14%, and a net-debt-to-capital ratio of 11%. Management also kept its 2026 cash capital spending outlook at $27 billion to $29 billion. That matters because Exxon is still funding Guyana growth, evaluating opportunities like Venezuela, and maintaining a large buyback program without looking financially stretched.Related: Exxon CEO’s stark message unfolds as US officials land in CaracasExxon by the numbersFourth-quarter 2025 earnings: $6.5 billionFourth-quarter 2025 adjusted earnings: $7.3 billionFourth-quarter 2025 cash flow from operations: $12.7 billionFull-year 2025 earnings: $28.8 billionFull-year 2025 production: 4.7 million oil-equivalent barrels per dayQuarterly dividend: $1.03 per share2025 shareholder distributions: $37.2 billion, including $20 billion of buybacksFor investors who want the full financial picture, Exxon’s latest annual report on Form 10-K and the January earnings release are the key places to start.What the Exxon chart says nowXOM opened at $165.58, traded as high as $171.20, fell as low as $164.80, and closed at $170.99. After-hours trading showed shares at $170.86.The stock is still trading well above both key trend markers. The 20-day exponential moving average (EMA) (light blue) sits at $158.18, while the 200-day EMA (dark blue) sits at $128.41. That keeps both the short-term and longer-term trends pointed in the same direction.

Exxon stock’s daily chart with key levels and EMAsTrading View

There’s a strong level underneath the stock. A former resistance zone between roughly $120 and $127 now looks like a possible support band if oil starts to cool off.That area matters because Exxon spent months fighting through it. Once the stock cleared that range, the rally accelerated.The setup now is fairly clean. The stock is strong, but it is also extended enough that some digestion would not be surprising. If buyers step back in on any pullback and defend that old resistance zone, the larger breakout structure stays intact.Related: Surging Chevron stock has more going for it than just higher oil prices

Gas prices in 2026 have climbed to near-record levels, driven largely by geopolitical instability in the Middle East, a critical region to global oil production and transportation. War with Iran and tension in the region have disrupted key maritime routes that carry a significant portion of the world’s oil supply.These disruptions have pushed oil prices higher, increasing fuel costs worldwide and putting pressure on transportation-dependent industries.Major logistics providers, including the U.S. Postal Service (USPS), FedEx, United Parcel Service (UPS), and DHL, are now facing higher operating costs across their air and ground delivery networks. Fuel is one of the largest variable expenses for carriers, typically accounting for up to 40% of total operating expenses, according to Motive. This means that even small increases in oil prices can significantly impact overall transportation costs.In response, private carriers have introduced or expanded fuel surcharges, passing a portion of the burden onto consumers. Shipping prices have consequently risen across the industry in recent months.USPS, one of the most affordable delivery options, is now seeking to raise prices as well, or it may run out of money and cease service.USPS requests price increasesOn March 25, USPS filed a request with the Postal Regulatory Commission (PRC), seeking an 8% temporary price increase. The agency says the adjustment is necessary to better align pricing with rising transportation and fuel costs. “This temporary price adjustment will provide needed flexibility for the Postal Service by helping to ensure that the actual costs of doing business are covered, as required by Congress,” said USPS in its filing.If approved, the price increase would take effect on April 26, 2026, and remain in place through January 17, 2027. Shipping services affected include:Priority Mail ExpressPriority MailUSPS Ground AdvantageParcel SelectUSPS noted that, even with the proposed 8% increase, its rates would remain much lower than those of many competitors, as the adjustments represent less than one-third of what some carriers charge in fuel surcharges alone.

USPS proposes an 8% temporary price increase for 2026.Shutterstock

Competitors have already raised pricesUSPS emphasized that its competitors have already taken action to offset rising fuel costs.Recent surcharges from competitorsFedEx: Introduced a per-pound demand surcharge on shipments between the U.S. and the Middle East, South Asia, and Africa in March 2026, with fuel surcharges updated weekly, according to the FedEx website.UPS: Implemented a per-pound surge fee for shipments between the U.S. and the Middle East in March 2026, with fuel surcharges updated weekly according to the UPS website.DHL: Enacted a 5.9% general average price increase for U.S. Express shipments beginning January 1, 2026, with fuel surcharges updated monthly, according to the DHL website.These pricing strategies are consistent with broader industry practices, in which carriers regularly adjust surcharges in response to fluctuations in fuel costs.USPS warns of financial riskThe pricing request follows a warning from Postmaster General David Steiner, who told Congress in a written statement on March 17 that USPS will run out of cash within 12 months unless lawmakers lift a decades-old cap and allow the agency to borrow more money.”I am not sure that the American public is aware that the Postal Service is at a critical juncture,” said Steiner. “At our current run rate and if we continue to pay our required obligations in the same manner as we have done in recent years, then we will be out of cash in less than 12 months.”He pointed to long-term declines in mail volume as a driver of revenue loss, claiming that a comparable drop would be unsustainable for private carriers.USPS financial results highlight ongoing challenges USPS’ latest earnings report underscores these concerns. In the first quarter of fiscal 2026: Revenue: Declined 1.2% year over yearControllable income: Fell by $618 million to $350 millionNet loss: Increased by nearly $1.4 billionThe agency cited declining volumes across its First-Class Mail, Shipping and Packages, and Marketing Mail as primary contributors, partially offset by prior price increases.Meanwhile, total operating expenses rose 4.6%, compared to the same period last year.”We continue to face difficult systemic financial and business model headwinds,” said Steiner in an earnings statement. “We are convinced that these efforts, if combined with needed regulatory, administrative, and legislative changes, can meet the needs of the American public and return the Postal Service to long-term financial stability and strength.”USPS’ previous price adjustmentsThis is not the first time USPS has requested price raises in recent years.During the 2025 holiday season, the agency implemented temporary increases ranging from $0.30 to $16, which remained in place from October 5, 2025, through January 18, 2026.Although USPS initially said it would delay further hikes until mid-2026, it introduced another round of price adjustments in January 2026 as part of its broader 10-year transformation plan aimed at restoring long-term financial sustainability.Why it mattersUSPS delivers mail and packages to more than 170 million addresses nationwide, six to seven days per week, yet it receives no taxpayer funding for its operations. Instead, it relies entirely on customer revenue, leaving pricing as one of the few tools to manage rising costs.However, Industry analysts warn that frequent or large rate hikes could further reduce mail volume, potentially worsening the agency’s financial position.”If rate increases proceed at the current frequency and magnitude without critical review, they risk plummeting volume further and exacerbating USPS’ financial challenges,” said NDP Analytics in its 2024 Critique of USPS Elasticities report.More retail business coverage:48-year-old nostalgic mall retailer will close 25 stores in 2026Shein invests $42 million as Amazon’s growth raises the stakesAmazon CEO warns shoppers of major changes aheadMailers Hub Managing Director Leo Raymond expressed similar concerns, citing the cumulative impact of repeated price increases over recent years.”Rising postal rates have had an impact on volume for sure. It’s not just last year’s postage increases, but a compounding factor of twice-a-year increases over a three-year period,” said Raymond to Printing Impressions. “The Postmaster General denies it — he says it’s just a general decline — but even if that is true, it is being worsened by significant increases that have been imposed on mail.”Related: Apple closes all stores in fast-growing market

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Boeing’s (BA) recovery story is starting to change.For most of the past year, the stock traded on backlog and the idea that production would eventually normalize.Now, the focus is shifting.Investors are no longer asking whether demand exists. The order book is already there.The stock is down more than 22% since reporting Q4 earnings on Jan. 27, showing the market still isn’t convinced the turnaround is real.At the same time, the broader backdrop is changing.Airlines are still expanding routes and investing in fleet growth, according to OAG, even as fuel costs rise and economic uncertainty builds. That puts more pressure on Boeing to execute.The key question now is whether Boeing can keep production steady and turn that into durable cash generation.Valuation snapshotMarket cap: $152.7 billionEnterprise value: $180.5 billionShare price: Approximately $190Analysts’ ave. target price: $271.21 (about a 43% implied upside)2-year annual expected revenue growth: 11.8%Forward EV/EBITDA: 37.6x
Source: TIKR.com
Boeing’s production recovery shifts focus to cash flowBoeing’s biggest fourth-quarter development was a meaningful restart in commercial aircraft production.CEO Kelly Ortberg said the company “made significant progress on our recovery in 2025” as Boeing generated $375 million in free cash flow.More Airlines:American Air launching 15 new summer routes between U.S. citiesLow-cost airline will launch new flight to South Korea from USAmerican Airlines joins the Spirit Airlines bankruptcy caseBoeing’s 737 output reached 42 aircraft a month, while 787 activity improved and deliveries increased.Higher production matters because it spreads fixed costs across more aircraft, which ultimately drives margin recovery.Fourth-quarter revenue grew 57% year over year to $23.9 billion, while Boeing’s backlog hit a record $682 billion, driven by 1,173 net commercial aircraft orders during the year.That strength showed up across the business, with all three segments reaching record backlog levels.Management also struck a more confident tone heading into 2026. “[We] have set the foundation to keep our momentum going in the year ahead,” Ortberg said. New orders reinforce demand heading into 2026Boeing confirmed a major widebody order from Sun PhuQuoc Airways in February for up to 40 787 Dreamliner jets. The aircraft will serve as the backbone of a new international airline based in Vietnam, highlighting continued demand for long-haul travel and fleet expansion.The deal matters because it reinforces Boeing’s position in widebody aircraft, where margins are typically higher, and demand is tied to long-term global travel growth.At the same time, Boeing secured another key order from Vietnam Airlines for 50 737 MAX jets. The aircraft will support short- and medium-haul expansion as air travel demand rises across Southeast Asia.Together, the two orders show strength across both narrowbody and widebody segments.They also point to a broader trend. Airlines are still investing in fleet growth and modernization, per Forbes, especially in faster-growing international markets.That demand backdrop supports Boeing’s production ramp heading into 2026.Boeing’s asset sale masks weak core profitabilityDespite the operational progress, Boeing’s reported profit was driven by a $9.6 billion gain from the Digital Aviation Solutions divestiture.Without that boost, the core picture looks weaker, with Boeing Commercial Airplanes posting a negative 5.6% operating margin.The company noted the sale added $11.83 to EPS, but investors are looking past headline numbers to earnings quality, delivery rates, and margin improvement.

Boeing’s Dreamliner jets will serve as the backbone of a new international airline based in Vietnam.Patrick T. Fallon via Getty Images

What could drive Boeing higherSustained 737 production at 42+ aircraft per month supports deliveries and cash flow.Continued improvement in 787 output lifts mix and margins.A second straight quarter of positive free cash flow strengthens the recovery narrative.Narrowing losses in Boeing Commercial Airplanes signal improving core profitability.Spirit integration reduces supplier disruptions and improves build consistency.What could pressure the stockNew quality issues disrupt deliveries and increase rework costs.Production slips below current rates, pressuring revenue and cash flow.Spirit AeroSystems integration costs weigh on margins before benefits materialize.High debt load ($54.1B) limits flexibility if cash flow weakens.Core margins remain negative despite higher production.Spirit AeroSystems deal raises execution riskBoeing’s acquisition of Spirit AeroSystems adds another layer to the story.The deal brings a key supplier back under tighter control, which could reduce production bottlenecks over time. But it also increases execution risk at a sensitive point in the turnaround.Boeing ended the quarter with $54.1 billion in debt, leaving less room for error if integration costs rise or benefits take longer to appear.Management emphasized stable operations as a priority following the deal, but investors will need proof that integration supports production without hurting margins or cash flow.Key takeaway for Boeing investorsBoeing has a record $682 billion backlog, improving production, and clear signs of recovery.But the stock is down more than 22% since late January because investors still don’t trust that progress will translate into consistent cash flow.Here’s what matters next:Can Boeing sustain production without new quality issues? (Consistency drives cash flow.)Can margins improve as volume scales? (This unlocks valuation upside.)If Boeing delivers on those points, the stock likely has room to move higher. If not, the market may continue to discount the recovery story.Related: Longtime oil analyst sends dire oil price message