Adobe Systems Incorporated (NASDAQ:ADBE) continues to grow through changes. The San Jose-based software giant, best known for its Photoshop, Acrobat, and Creative Cloud software platforms, is well into its transition as an artificial intelligence (AI) company. As ADBE stock moves higher, investors must decide whether to Photoshop the equity into their portfolios or to crop the stock out. With its history of producing successful products, adapting to current trends, and moving into AI, ADBE stock is well-positioned to continue moving higher.

ADBE Stock in a Long Growth Trend and Can Grow More

To be sure, ADBE stock is already years into a growth trend. The equity has been on an upward trend since its low in 2011 of about $23 per share, representing a six-fold increase since. Much of the growth occurred in the last year, rising about 75% year-to-date. This includes the nearly 9% surge in the stock price on October 18. Buyers bid up the price after ADBE announced expectations for higher-than-expected revenues and earnings.

Despite the move, the ADBE stock price is likely to rise further. The consensus forward price-to-earnings ratio (PE) stands at 32. This figure is higher than the average PE of 19.5 for the S&P 500. However, the 20% growth rate for 2018 remains much higher than the S&P 500 average. The PE also compares well against other high-flying technology stocks in the AI space, such as NVIDIA Corporation (NASDAQ:NVDA).

Adobe Great at Competitive Moats

However, the company’s most enduring benefit is its ability to build competitive moats. Whether it’s the success drivers of the past, such as Acrobat or Photoshop, or its present-day growth platforms such as the Creative Cloud, ABDE shows an ability to lead in its segments. As my colleague James Brumley points out, Sensei, Adobe’s upcoming AI platform, will likely perform well also.

Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC), International Business Machines Corp. (NYSE:IBM), and Texas Instruments Incorporated (NASDAQ:TXN) are among the other older technology companies making moves into AI. Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), and others also compete in this space. How Sensei compares with and competes against these companies’ products remains to be seen. However, given ADBE’s history, one can expect the company will carve out its niche in this large space.

Be cautious with ADBE

Still, buyers should remain cautious. While ADBE stock likely has some upside left, its current PE ratio stands at 55. The PE will come down under much higher 2018 earnings. However, investors should watch more carefully for any slowdown in growth as PE ratios rarely rise above 50 in lower-growth scenarios. Moreover, the stock has moved upward for over six years now. While the stock can grow more, this trend could be entering the fourth quarter. Stockholders should be prepared for any changes and act accordingly.

ABDE stock’s traditional position as a market leader and its ability to adapt to new trends leave the stock well-positioned to move higher. Its latest move into AI and recent revenue and earnings forecasts from the company are driving this trend.

Further, the company has a 30+ year history of producing software that attracts users and dominates markets. This ability places Adobe in an exclusive group of companies that can adapt and grow decade after decade under varied and changing market conditions. Moreover, the products of ABDE tend to dominate their space. One can assume Adobe will do the same within some areas of AI.

Given the wide moat on several Adobe products and the growth room left in the stock that’s been on a years-long uptrend, investors can still buy ADBE stock and then watch it. If played right, a PDF of one’s monthly statement could show higher profits, courtesy of ADBE.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks.