Adobe (ADBE) remains a buy as recent share price declines have created an attractive valuation for growth-focused investors. ADBE delivered double-digit revenue growth in Q4 and FY2025, with management forecasting continued double-digit ARR growth into 2026. Profitability concerns exist due to near-term margin pressure from innovation spend, but ADBE maintains industry-leading profitability metrics.
The latest trading day saw Adobe Systems (ADBE) settling at $296.12, representing a -2.62% change from its previous close.
Adobe's ADBE shares have dropped 8.8% in the past three months, underperforming the broader Zacks Computer and Technology sector's return of 3.9%. The drop can be attributed to an uncertain macroeconomic environment, growing fear of an AI bubble and stiff competition from the likes of Microsoft MSFT, OpenAI, Alphabet GOOGL, Salesforce CRM, Midjourney and Canva.
AI has really landed a heavy shot on some of the software names, especially the SaaS (Software as a Service) companies that have been quite slow to brace for the rise of the artificial intelligence (AI) age.
Adobe needs to convince Wall Street that AI is helping revenue growth in order for its shares to move higher, analysts say.
Software was once the hottest industry on Wall Street. Not so in the AI era.
Adobe (ADBE) reported earnings 30 days ago. What's next for the stock?
Adobe Inc. is a high-quality compounder trading at its most attractive valuation since the early 2010s. Despite competitive pressures from Figma and generative AI, ADBE maintains strong double-digit revenue and profit growth, complemented by aggressive share buybacks. Shares now trade at 19.8x earnings and 5.8x sales, well below historical averages, offering compelling long-term upside.
Technology continued its dominance throughout 2025, with the AI frenzy painting a rosy picture for 2026 as well. But while 2025 was a strong period for many, several well-known tech companies – Adobe ADBE and Salesforce CRM – didn't join the party, declining roughly 20% a piece.
Adobe trades at an extremely discounted EV/ARR of 5.50x, significantly below its creative SaaS peers like FIG at 15.46x and Canva at 19.69x. Despite the decelerating FY2026 growth guidance and the market's AI skepticism, ADBE's AI-influenced ARR now exceeds one-third of its business, supporting future growth prospects. The Semrush deal enhances ADBE's AI-driven marketing suite, expands its capabilities in generative/search engine optimization, and positions it for robust agentic AI monetization.
Adobe (ADBE) stock could be an attractive purchase at this moment. Why? Because it offers high margins – indicative of its pricing power and ability to generate cash – at a discounted price.
Adobe (ADBE) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.