Adobe (ADBE) AI Stock Analysis

• Market Cap: $171.22B
• Dividend Yield: N/A
• Average Volume (3M): 3.19M
• Price to Earnings (P/E): 24.5
• Beta (1Y): 1.16
• Revenue Growth: 10.69%
• EPS Growth: 40.10%
• Country: US
• Employees: 30,709
• Sector: Technology
• Sector Strength: 81
• Industry: Software - Infrastructure
• EPS (TTM): 5.06
• Shares Outstanding: 426,200,000
• 10 Day Avg. Volume: 4,179,307
• 30 Day Avg. Volume: 3,191,536
• PEG Ratio: 113.63
• Price to Book (P/B): 11.42
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 21.70
• Enterprise Value/Market Cap: 0.94
• Enterprise Value/Revenue: 1.89
• Enterprise Value/Gross Profit: 8.21
• Enterprise Value/Ebitda: 4.61
• 1Y Price Target: $503.83
• Price Target Upside: 33.27% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27

• Rating: 76 Outperform
• Price Target: $427.00 ▲(12.95%Upside)

Adobe's overall stock score is driven by its robust financial performance and positive outlook from the recent earnings call, which highlight strong growth and strategic positioning. However, the technical analysis indicates bearish trends, and the current valuation does not offer a dividend yield, slightly offsetting the positive aspects.

Positive Factors

Market Position

Adobe's transformation into a SaaS leader since 2009 has driven robust revenue growth and margin improvement, with an operating margin of 38% among the highest of its peers.

Product Adoption

Accelerating AI and Express adoption is viewed as encouraging, especially considering investor concerns about Adobe's potential market share loss.

Revenue Growth

Adobe’s Q2 results were solid with total revenue growth landing ahead of the guide beating Citi/street estimates.

Negative Factors

Competition

Intensifying competition in the global market could create downward pressure on Adobe's product pricing and margins.

Economic Impact

Global economic uncertainty and an economic slowdown may lead to a reduction in enterprise spending on Adobe's products and services.

Growth Concerns

There is difficulty in seeing a durable AI growth story with diminishing mind-share and market share of Adobe’s AI models.

Adobe Business Overview & Revenue Model

Company Description

Adobe Inc. operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, workers, marketers, educators, enthusiasts, communicators, and consumers. The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings. The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.

How the Company Makes Money

Adobe makes money primarily through the sale of software subscriptions and licensing. Its main revenue streams are divided into three segments: Digital Media, Digital Experience, and Publishing. The Digital Media segment, which includes the Creative Cloud and Document Cloud, generates the majority of Adobe's revenue by offering subscription-based access to its suite of creative software. The Digital Experience segment provides enterprise solutions for marketing, analytics, and commerce, contributing significantly to the company's earnings through subscription and service fees. The Publishing segment, although smaller, adds revenue through licensing fees for products that specialize in printing, publishing, and design. Adobe also benefits from strategic partnerships and acquisitions, enhancing its product offerings and market reach.

Adobe Financial Statement Overview

Summary

Adobe demonstrates a sound financial position with strong profitability, prudent balance sheet management, and excellent cash flow generation. The company is well-positioned within the software industry, showing resilience and growth potential. While there is a slight reliance on liabilities, the firm's strong equity base and cash flow mitigate potential risks. The financials suggest Adobe is capable of sustaining its growth trajectory while maintaining financial stability.

Income Statement

Adobe's income statement shows strong profitability with a consistent increase in both gross and net profit margins. The TTM gross profit margin stands at 89.0%, and the net profit margin is 30.6%, highlighting efficient cost management and strong pricing power. Revenue growth has been steady, with a TTM growth rate of 2.5%, indicating stability and resilience in the software industry. The EBIT margin is at 36.3%, reflecting solid operational performance, while the EBITDA margin of 40.1% showcases the company's ability to generate cash from operations effectively.

Balance Sheet

Adobe's balance sheet is robust, with a low debt-to-equity ratio of 0.03, indicating minimal leverage and reduced financial risk. The return on equity (ROE) is healthy at 51.5%, showcasing the company's ability to generate substantial profits from shareholders' equity. However, the equity ratio is 43.7%, suggesting that a significant portion of the company's assets is financed by liabilities, which could pose some risk if not managed properly. Overall, the balance sheet indicates good financial health with a strong equity base and prudent debt management.

Cash Flow

Adobe's cash flow statement reflects strong cash generation capabilities with a free cash flow growth rate of 17.3% TTM, indicating efficient cash management and reinvestment strategies. The operating cash flow to net income ratio is 1.39, and the free cash flow to net income ratio is 1.36, underscoring the company's ability to convert profits into cash effectively. This strong cash flow position supports future growth initiatives and provides a buffer against potential economic downturns.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
22.04B	21.50B	19.41B	17.61B	15.79B	12.87B
	Gross Profit
19.61B	19.15B	17.05B	15.44B	13.92B	11.15B
	EBIT
8.00B	6.74B	6.65B	6.10B	5.80B	4.24B
	EBITDA
9.14B	8.03B	6.65B	7.05B	6.67B	5.13B
	Net Income Common Stockholders
6.75B	5.56B	5.43B	4.76B	4.82B	5.26B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
7.43B	7.89B	7.84B	6.10B	5.80B	5.99B
	Total Assets
29.95B	30.23B	29.78B	27.16B	27.24B	24.28B
	Total Debt
408.00M	6.06B	4.08B	4.63B	4.67B	4.71B
	Net Debt
-6.35B	-1.56B	-3.06B	397.00M	829.00M	230.00M
	Total Liabilities
16.86B	16.13B	13.26B	13.11B	12.44B	11.02B
	Stockholders Equity
13.10B	14.11B	16.52B	14.05B	14.80B	13.26B
Cash Flow		Free Cash Flow
9.18B	7.82B	6.94B	7.40B	6.89B	5.31B
	Operating Cash Flow
9.36B	8.06B	7.30B	7.84B	7.22B	5.73B
	Investing Cash Flow
-401.00M	149.00M	776.00M	-570.00M	-3.52B	-414.00M
	Financing Cash Flow
-8.44B	-7.72B	-5.18B	-6.83B	-4.30B	-3.49B

Adobe Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 378.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADBE, the sentiment is Negative. The current price of 378.04 is below the 20-day moving average (MA) of 408.24, below the 50-day MA of 387.58, and below the 200-day MA of 450.18, indicating a bearish trend. The MACD of -1.06 indicates Positive momentum. The RSI at 35.13 is Neutral, neither overbought nor oversold. The STOCH value of 17.02 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADBE.

Adobe Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	83 Outperform	$3.56T	37.03	33.61%	0.69%	14.13%	12.10%
PANW	81 Outperform	$132.10B	115.62	21.16%	―	13.91%	-50.96%
FTNT	79 Outperform	$78.03B	42.35	205.91%	―	13.83%	58.13%
CRWD	78 Outperform	$122.64B	721.64	-5.76%	―	25.94%	-226.80%
ORCL	77 Outperform	$583.79B	47.97	83.87%	0.96%	8.38%	16.96%
ADBE	76 Outperform	$171.22B	24.47	52.25%	―	10.69%	40.10%
Sector *	62 Neutral	$11.92B	10.03	-7.37%	3.70%	7.32%	-8.25%

Adobe Corporate Events

Adobe Stockholders Approve Equity Plan Amendment

On April 22, 2025, Adobe Inc. held its Annual Meeting of Stockholders, where the stockholders approved an amendment to the 2019 Equity Incentive Plan, increasing the share reserve by 7 million shares. Additionally, the Board of Directors adopted amendments to the company’s bylaws to address SEC’s universal proxy rules and update procedural mechanics for stockholder nominations and proposals. These changes aim to enhance governance and align with regulatory requirements, impacting how stockholder meetings and director nominations are conducted.