ADBE Stock: Is There Hope for Adobe?

Way back in September 2024, OPTO noted that, although the Adobe [ADBE] share price was down, investors could be overlooking the firm’s role in the artificial intelligence (AI) theme. 

“If Adobe can continue to offer value for money through its AI offerings,” we wrote, “then ADBE stock could rise from its current level.”

Did it?

Absolutely not.

ADBE stock is down 32% over the last 12 months, and nearly 35% over the last five years. 

In this stock analysis we’ll ask two questions: what happened? And: is there hope for the Adobe share price?

Trajectory Overview

Adobe was founded in December 1982 by ex-Xerox researchers, in order to commercialize PostScript, a revolutionary page-description language that catalyzed the desktop publishing industry. 

Early success with PostScript led to vector graphics program Illustrator and, later, Photoshop, which became industry standards. Adobe introduced the PDF format and Acrobat in the early 1990s, transforming document sharing. 

The 2005 acquisition of Macromedia expanded its web and multimedia tools. In 2013, Adobe transitioned to a subscription-based Creative Cloud model, creating recurring revenue and fueling expansion into digital marketing and experience software.

For a long time, Adobe was basically synonymous with desktop publishing and graphic design more generally. Of late, however, it has come to look like legacy tech. Here’s why.

How a Velociraptor Becomes a Tyrannosaurus

Firstly, its flagship creative tools are decades old. While they are regularly updated, they no longer feel disruptive; they are entrenched standards rather than new frontiers. Market saturation also limits growth. Creative Cloud dominates professional design, publishing and marketing segments, leaving little room for rapid organic user expansion. Growth now comes from incremental upselling or enterprise expansion rather than explosive adoption.

Secondly, the subscription model, while stabilizing cash flow through recurring revenue, seemingly reinforces Adobe’s focus on its installed base over innovation for new markets. Meanwhile, generative AI, mobile-first design apps and cloud-native tools like Canva, Figma [FIG] and Midjourney appeal to younger, more agile creators. A large portion of revenue is now in B2B licensing, enterprise contracts and document management — stable but low-growth — further cementing the incumbent image. 

In short, Adobe is no longer the scrappy disruptor of the ‘80s and ‘90s, nor even the top-of-its-game market leader of the ‘00s and ‘10s. It is a dominant, cash-flow-rich, but mature technology stalwart, balancing innovation with the responsibilities of scale.  

Q4/FY 2025 Earnings

Reporting on December 10 last year, Adobe logged Q4 revenue of $6.19bn, up 10% year-over-year, with non-GAAP EPS of $5.50, surpassing the $5.40 consensus. 

For FY 2025, the company posted record revenue of $23.77bn, an 11% increase, while total annual recurring revenue (ARR) reached $25.20bn, up 11.5%. 

Segment-wise, Q4 Digital Media revenue grew 11% to $4.62bn, and Digital Experience rose 9% to $1.52bn.

Looking ahead, Adobe expected FY 2026 revenue between $25.90bn and $26.10bn, non-GAAP EPS of $23.30–23.50, and total ending ARR growth of roughly 10.2%. 

Despite beating Q4 estimates, the stock saw volatility following the outlook.

There were various possible reasons for this, related to the broader disenchantment with the stock. 

Investors may have been disappointed that future growth is moderating. FY 2026 revenue and ARR growth guidance implies slower acceleration than in recent years, which weighed on sentiment. Analysts have cut price targets, with some citing concerns about margin compression and lack of clear upside catalysts.

Elsewhere — and this is key — the market likely wants evidence that Adobe’s AI initiatives can drive meaningful incremental revenue. Usage metrics have grown, but direct monetization and pricing power remain unclear, especially against cheaper competitors.

Relatedly, increasing competition from generative‑AI and cloud tools like Canva and Figma is seen as eroding Adobe’s moat, leading some analysts to downgrade or lower valuations.

Stock Comparison: ADBE vs ADSK vs CRM

Let’s look at how Adobe compares to two other enterprise software stocks. 

Autodesk [ADSK] is a software leader in 3D design, engineering and construction tools used in architecture, manufacturing, media and entertainment. It has transitioned to subscription and cloud offerings, posting solid double‑digit revenue growth and strong profitability metrics as demand for AI‑enabled design workflows rises. The company benefits from recurring revenue, robust gross margins and expansion into cloud‑based services across global markets.

Salesforce [CRM] might be a less obvious comparison, but there is certainly a lot of overlap in terms of how the two firms operate. Salesforce dominates the customer relationship management (CRM) market with an expansive cloud software suite spanning sales, service, marketing automation, analytics and enterprise AI. It continues to embed AI across its platform, driving recurring revenues and solid margin performance. Its large installed base, lucrative enterprise contracts and ecosystem integrations support long‑term growth, despite macro pressure on IT spending.

Source: Yahoo Finance

Adobe, Autodesk and Salesforce each represent distinct corners of the enterprise software landscape, with different fundamental drivers. 

Adobe leads in creative and document software with high recurring revenue, strong margins and broad adoption across professional and enterprise segments; its transition to AI‑enhanced workflows offers the possibility of future monetization despite near‑term earning pressures. 

Autodesk operates in the engineering and design software niche, where subscription and cloud sales have driven solid double‑digit growth. Its products serve long life‑cycle, capital‑intensive industries like architecture and manufacturing, offering stable visibilities but concentrated use cases relative to Adobe’s broader creative platform.

Salesforce sits in the enterprise cloud platform tier, benefitting from deep CRM penetration and rapid expansion into AI‑driven analytics and automation. Its revenue scale dwarfs Adobe’s, with diverse enterprise contracts and structural recurring income supporting predictable cash‑flow. 

From an investment perspective, Adobe offers strong profitability and entrenched workflows; Autodesk provides growth via AI/design adoption; and Salesforce delivers expansive cloud‑platform exposure with broad enterprise integration.

Conclusion: The Investment Case for ADBE Stock

The Bull Case for Adobe

Adobe benefits from a dominant position in creative software and document management, underpinned by its subscription-based Creative Cloud and Document Cloud platforms. Recurring revenue, high margins and expanding AI-driven tools like Firefly may position the company for continued growth. Adobe’s next earnings report is scheduled for March 11, 2026. Investors and mavens alike will be scrutinizing the extent to which the firm has managed to leverage its AI offering. If it is able to inject more dynamism into it, and make more money out of it, then that might offer some hope for the longer-term prospects of the ADBE share price.

The Bear Case for Adobe

Adobe faces slowing growth as core Creative Cloud markets mature, and competition from Figma, Canva and other generative AI tools intensifies. Rising R&D and marketing costs to support AI integration could pressure margins, while macroeconomic weakness may curb enterprise IT spending. Dependence on subscription revenue also exposes Adobe to churn risk, and high valuation multiples leave limited upside if growth fails to meet investor expectations.