AI hardware rallies as Adobe and Palantir shares retreat
Investors rotated towards memory, connectivity, chip-equipment and power stocks as software valuations came under pressure.
AI-related hardware stocks rallied on 4 September, while Adobe shares fell 6.7% and Palantir dropped 4.5%, according to Yahoo Finance. The moves highlighted a market weighing tangible demand for AI capacity against the prospects for software monetisation.
Adobe’s decline followed news that Anil Chakravarthy will become chief executive on 1 December. The company reported fiscal second-quarter revenue of $6.62 billion, up 13%, while AI-first annualised recurring revenue exceeded $500 million.
Palantir’s retreat came amid a broader shift away from highly valued software stocks, the source said. The company reported second-quarter revenue growth of 93% to $1.94 billion, reaching $1.94 billion, while US commercial revenue rose 149% and its adjusted operating margin reached 62%.
The competing investment cases remain unsettled. Adobe’s distribution across creative, document and marketing workflows could support AI adoption, but investors are also assessing pricing pressure from lower-cost generative tools and the impact of leadership changes. Palantir’s growth and governed operational software remain strengths, while valuation, contract concentration and the risk of slower growth remain concerns.
Historical filings cited by the source showed 81 hedge funds held Adobe at 30 June, down from 86 at 31 March. Eighty-six held Palantir in the second quarter, down from 96 in the first. Those figures may not reflect current positions, and one day of trading does not establish which part of the AI market will ultimately capture more value.
Adobe’s 10 September earnings report is the nearer test of whether AI is protecting or cannibalising its existing business. For Palantir, investors will be watching contract conversion and remaining-deal-value growth over a longer period.
