Adobe Q4 Outlook: Analysts Anticipate Record Revenue as Company Aims to Turn Around Recent Earnings Decline
Earnings Expectations: Analysts anticipate Adobe will report fourth-quarter revenue of $6.11 billion and earnings per share of $5.39, both showing significant year-over-year growth. The company has a history of beating estimates, having done so in nine of the last ten quarters.
Analyst Insights: JPMorgan's Mark Murphy maintains an Overweight rating with a $520 price target, citing positive customer feedback and Adobe's strong fundamentals, particularly in AI and digital modernization.
Recent Acquisition: Adobe's upcoming earnings report follows its announcement to acquire SEMrush Holdings for $1.9 billion, which is expected to enhance its generative engine optimization capabilities and support enterprise growth.
Stock Performance: Despite a history of beating earnings estimates, Adobe's stock has often declined post-reporting, with shares down 21.6% year-to-date in 2025, although they saw a slight increase of 1.9% recently.
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- Wix's Growth Potential: Wix.com has seen its stock price drop nearly 70% over the past year, yet its latest quarter shows revenue growth accelerating to 14%, indicating that AI tools are not undermining its website development business but may actually expand its market share, making the current price of $72 an attractive entry point with Wall Street's target price at $151.
- Acquisition Boosts Development: Wix's acquisition of startup Base44, which focuses on no-code mobile app development, is projected to achieve $50 million in annual recurring revenue by the end of 2025, further enhancing Wix's product offerings and driving future growth.
- Adobe's Undervalued Stock: Adobe's stock has fallen nearly 45% over the past year, currently priced at $258, significantly below its average target price of $429; despite facing AI competition, the company posted record revenue of $6.2 billion last quarter, demonstrating strong market demand and ongoing customer growth potential.
- Market Confidence and Investment Timing: While AI poses competitive threats, existing customers' trust in Wix and Adobe makes these software solutions hard to replace, and the current undervaluation presents a great buying opportunity for investors, especially during the stock price dips of Adobe and Wix.
- Market Concerns Over AI Disruption: Despite Wix and Adobe's solid business performance, fears of AI potentially disrupting existing software businesses have led to Wix's stock plummeting nearly 70% over the past year and Adobe's by almost 45%, reflecting investor anxiety about increasing competition.
- Wix's Growth Potential: Wix's latest earnings report indicates a revenue growth acceleration to 14%, suggesting strong market demand in the low-code website development space, and the new AI tools being developed are expected to further expand its addressable market and enhance future growth prospects.
- Adobe's Financial Performance: In spite of AI competitive pressures, Adobe posted record revenue of $6.2 billion last quarter and initiated share buybacks at a discount, demonstrating its ongoing appeal in the creative industry and robust customer base, with expectations for continued revenue growth.
- Investment Opportunities: With Wix's market cap currently under $4 billion and free cash flow at $570 million, investors have a chance to buy into a durable growth stock at a bargain price, while Adobe's stock is also trading at historical lows, presenting a favorable buying opportunity.
- AI Disrupts Traditional Software: The rise of Anthropic poses significant challenges to traditional software companies like Workday and Salesforce, particularly in the application of AI technology, threatening their market share and customer loyalty.
- Surge in Capital Expenditures: Tech giants like Amazon and Google have significantly raised their capital expenditure outlooks, with Amazon projecting spending to reach $200 billion, far exceeding the $147 billion consensus, which could impact stock performance and investor confidence.
- Intensified Market Competition: The rapid advancement of AI technology raises questions about the value of enterprise software, leading investors to adopt a pessimistic view on the future of traditional software companies, especially in labor-intensive areas that may face workforce reductions due to AI adoption.
- Investor Confidence Shaken: Despite significant advancements by companies like Anthropic and OpenAI in the AI space, market confidence in traditional software companies is waning, resulting in poor stock performance over the past six months and raising concerns about future profitability.
- Strong Revenue Growth: ServiceTitan reported a 25% year-over-year revenue growth in Q3 of fiscal 2025, with an annual revenue run rate nearing $1 billion, demonstrating resilience in the SaaS market despite overall turbulence due to AI concerns.
- Unique Market Positioning: The company focuses on providing software for HVAC, roofing, plumbing, and other skilled trades, catering to specific needs and avoiding direct competition with large enterprise software, thus remaining relatively insulated from AI disruptions.
- Improved Profitability: ServiceTitan's non-GAAP operating margin increased from 0.8% to 8.6% year-over-year, indicating significant progress in cost optimization and efficiency, enhancing its future profit potential.
- AI Application Prospects: Executives mentioned integrating AI technologies into their platform during the latest earnings call, indicating that ServiceTitan not only embraces AI but plans to leverage it to enhance software performance, maintaining a competitive edge.
- Market Recovery: The S&P 500 index rose by 0.05%, the Dow Jones Industrial Average by 0.10%, and the Nasdaq 100 by 0.18% on Friday, indicating a recovery after early losses, reflecting cautious optimism among investors regarding future economic prospects.
- Inflation Data Impact: The U.S. January Consumer Price Index rose by 2.4% year-over-year, below the expected 2.5%, marking the smallest increase in seven months, which may prompt the Fed to continue cutting rates, thus providing support for the stock market and alleviating concerns over rate hikes.
- Strong Software Stock Performance: Software stocks like Crowdstrike Holdings and ServiceNow rose over 4% and 3%, respectively, lifting the broader market and indicating a rebound in investor confidence in tech stocks, particularly amid rapid advancements in AI technology.
- Metal Stocks Retreat: Reports of the Trump administration's plans to narrow tariffs on steel and aluminum products led to declines in metal companies, with Century Aluminum falling over 7%, reflecting the negative impact of policy changes on the sector.
- Market Overreaction: The iShares Expanded Tech-Software ETF has dropped 30% since late October due to fears of AI competition, yet high switching costs may prevent businesses from easily changing software providers, suggesting future earnings could be more predictable than the market anticipates.
- Microsoft's Growth Potential: Microsoft 365 Commercial sales rose 14% year-over-year, with consumer sales up 27% and Dynamics 365 sales increasing by 17%, showcasing strong software performance under AI integration, while its forward P/E ratio stands at just 24, indicating a low valuation.
- Atlassian's Cloud Transition: Atlassian is pushing customers to its cloud-based platform, achieving a 120% net revenue retention rate for cloud customers in fiscal 2025, with momentum expected to continue into 2026; despite a forward P/E of 21, management forecasts an 18% revenue growth.
- Adobe's AI Integration: AI-influenced products accounted for one-third of Adobe's annual recurring revenue, and despite fears of AI displacing its software, its recurring revenue continues to grow at a double-digit pace, with the stock currently trading at less than 12 times forward earnings, highlighting its attractiveness.










