Adobe Shows Strong Growth Amid AI Pressures

Written by Emily J. Thompson, Senior Investment Analyst

ADBE-2.4%

Source: Fool

Updated: 1d ago

0mins

Source: Fool

Strong Financial Performance: Adobe's annual recurring revenue (ARR) grew by 11.5% year-over-year in 2025, reaching $25.2 billion, indicating robust growth potential driven by generative AI, showcasing the company's enduring competitiveness in the market.
Increased User Revenue: The integration of Firefly generative AI software has raised the average revenue per user for Adobe's premium Creative Cloud, further solidifying its leadership position in the creative software sector and expected to drive future revenue growth.
Market Competitive Advantage: Despite competition from AI tools, Adobe's financial results remain unaffected, highlighting its wide competitive moat in the creative software market, ensuring professional user loyalty and sustained demand.
Investment Opportunity Emerges: With Adobe's stock trading at just 13 times forward earnings expectations, combined with its strong financial performance, now presents a great opportunity for investors to buy shares, especially against the backdrop of a 14% stock price decline.

ADBE

$297.42+Infinity%1D

Analyst Views on ADBE

Wall Street analysts forecast ADBE stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ADBE is 454.52 USD with a low forecast of 310.00 USD and a high forecast of 660.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.

24 Analyst Rating

17 Buy

6 Hold

1 Sell

Moderate Buy

Current: 304.720

Low

310.00

Averages

454.52

High

660.00

Current: 304.720

Low

310.00

Averages

454.52

High

660.00

UBS

Neutral

downgrade

$375 -> $340

2026-01-26

New

Reason

UBS

Price Target

$375 -> $340

AI Analysis

2026-01-26

New

downgrade

Neutral

Reason

UBS lowered the firm's price target on Adobe to $340 from $375 and keeps a Neutral rating on the shares.

BMO Capital

Outperform -> Market Perform

downgrade

$400 -> $375

2026-01-09

Reason

BMO Capital

Price Target

$400 -> $375

2026-01-09

downgrade

Outperform -> Market Perform

Reason

BMO Capital downgraded Adobe to Market Perform from Outperform with a price target of $375, down from $400. The firm's creative cloud survey indicates creative market competitive dynamics are increasing, particularly in smaller businesses, students, and freelancers. While Adobe's valuation is "undemanding," BMO does not see positive catalysts and thinks the shares will remain range-bound, the analyst tells investors in a research note.

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Jefferies

Hold -> Buy

upgrade

$300 -> $360

2026-01-04

Reason

Jefferies

Price Target

$300 -> $360

2026-01-04

upgrade

Hold -> Buy

Reason

Jefferies upgraded IBM to Buy from Hold with a price target of $360, up from $300. The firm adjusted ratings in the software sector as part of its "playbook" for 2026. Investors should stay underweight software as growth slows and lags other sectors like semiconductors, the analyst tells investors in a research note. Jefferies believes 2026 will be another year of "gradual" artificial intelligence monetization, with more meaningful growth needed to ease disintermediation fears. The firm prefers infrastructure over applications in the first half of the year, but believes negative application sentiment "is not grounded in realities." Applications sentiment should improve in the back half the year, Jefferies contends. To reflect this, the firm upgraded IBM and downgraded Adobe to start off the year.

Jefferies

Buy

Hold

downgrade

$500 -> $400

2026-01-04

Reason

Jefferies

Price Target

$500 -> $400

2026-01-04

downgrade

Buy

Hold

Reason

Jefferies downgraded Adobe to Hold from Buy with a price target of $400, down from $500. The firm adjusted ratings in the software sector as part of its "playbook" for 2026. Investors should stay underweight software as growth slows and lags other sectors like semiconductors, the analyst tells investors in a research note. Jefferies believes 2026 will be another year of "gradual" artificial intelligence monetization, with more meaningful growth needed to ease disintermediation fears. The firm prefers infrastructure over applications in the first half of the year, but believes negative application sentiment "is not grounded in realities." Applications sentiment should improve in the back half the year, Jefferies contends. To reflect this, the firm upgraded IBM and downgraded Adobe to start off the year.

About ADBE

Adobe Inc. is a global technology company. The Company's products, services and solutions are used around the world to imagine, create, manage, deliver, measure, optimize and engage with content across surfaces and fuel digital experiences. Its segments include Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment is centered around Adobe Creative Cloud and Adobe Document Cloud, which include Adobe Express, Adobe Firefly, Photoshop and other products, offering a variety of tools for creative professionals, communicators and other consumers. The Digital Experience segment provides an integrated platform and set of products, services and solutions through Adobe Experience Cloud. The Publishing and Advertising segment contains legacy products and services. In addition, its Adobe GenStudio solution allows businesses to simplify their content supply chain process with generative artificial intelligence (AI) capabilities and intelligent automation.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.