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Adobe (ADBE) AI Stock Analysis

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ADBE

Adobe

(NASDAQ:ADBE)

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Outperform 79 (OpenAI - 4o)
Rating:79Outperform
Price Target:
$409.00
▲(15.69% Upside)
Adobe's overall stock score is driven by its strong financial performance and positive earnings call, which highlight robust growth and strategic focus on AI. While technical analysis shows mixed signals, the company's fair valuation and raised guidance underscore its potential for continued success in the software infrastructure industry.
Positive Factors
AI Integration
Adobe's strategic focus on AI integration across its applications enhances product capabilities and customer value, driving long-term growth.
Digital Media Segment Growth
Continued growth in the Digital Media segment indicates strong demand for Adobe's core products, supporting sustained revenue expansion.
Cash Flow Strength
Robust cash generation supports Adobe's operational stability and provides flexibility for strategic investments and innovation.
Negative Factors
Competitive Pressure in AI Space
Increased competition in AI could impact Adobe's market share and necessitate further innovation to maintain its competitive edge.
Challenges in New Market Adoption
The need for customer education on AI technologies may slow adoption rates, affecting the speed of revenue growth in new markets.
Revenue Growth Deceleration
A slowdown in revenue growth could signal market saturation or increased competition, potentially impacting long-term financial performance.

Adobe (ADBE) vs. SPDR S&P 500 ETF (SPY)

Adobe Business Overview & Revenue Model

Company DescriptionAdobe Inc. is a multinational software company headquartered in San Jose, California, known for its innovative products in digital media and digital marketing. The company operates primarily in two segments: Digital Media and Digital Experience. Core products include Adobe Creative Cloud, which encompasses industry-leading design and multimedia software such as Photoshop, Illustrator, and Premiere Pro, as well as Adobe Document Cloud, which includes tools like Acrobat and Adobe Sign for document management and e-signatures. Additionally, the Digital Experience segment offers a suite of analytics, marketing, and advertising solutions, helping businesses optimize their digital engagement.
How the Company Makes MoneyAdobe generates revenue primarily through subscription-based services. The Digital Media segment, which includes Creative Cloud and Document Cloud, constitutes the bulk of the company's revenue, with customers paying recurring fees for access to software and services. Adobe's transition to a subscription model has led to a steady increase in Annualized Recurring Revenue (ARR). The Digital Experience segment contributes additional revenue through its suite of marketing and analytics solutions, which businesses purchase to enhance their digital marketing efforts. Furthermore, Adobe establishes strategic partnerships with various enterprises and technology companies, enhancing its market reach and driving sales through integrated solutions. The company's focus on innovation and expansion into new markets, such as artificial intelligence and machine learning, also plays a significant role in its revenue growth.

Adobe Key Performance Indicators (KPIs)

Any
Any
Total Digital Media Annual Recurring Revenue
Total Digital Media Annual Recurring Revenue
Measures the consistent revenue generated from digital media subscriptions, highlighting the stability and growth potential of Adobe’s core business model.
Chart InsightsAdobe's Total Digital Media Annual Recurring Revenue has shown consistent growth, reflecting strategic success in expanding its digital media offerings. The latest earnings call highlights a 12.1% year-over-year increase in ARR, driven by strong adoption of AI innovations like Firefly and Acrobat AI Assistant. Despite challenges in AI monetization and competitive pressures, Adobe's focus on AI and strategic partnerships positions it well for continued expansion. The company's raised revenue targets underscore confidence in sustaining this momentum, with significant contributions expected from its Creative Cloud and Digital Experience segments.
Data provided by:Main Street Data

Adobe Earnings Call Summary

Earnings Call Date:Aug 29, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Dec 11, 2025
Earnings Call Sentiment Positive
Adobe's earnings call highlighted robust growth driven by record revenue, strong AI integration, and high customer adoption. However, there are challenges related to competitive pressures in the AI space and the need for continued customer education on new AI technologies.
Q3-2025 Updates
Positive Updates
Record Revenue Performance
Adobe achieved record revenue of $5.99 billion, representing a 10% year-over-year growth.
Strong AI Integration and Innovation
AI-influenced ARR surpassed $5 billion, with new AI-first products achieving the end-of-year target of over $250 million.
Digital Media Segment Growth
Digital Media revenue reached $4.46 billion with an ending ARR of $18.59 billion, growing 11.7% year-over-year.
Digital Experience Segment Expansion
Digital Experience achieved $1.48 billion in revenue with a 9% year-over-year growth and subscription revenue growing 11%.
High Customer Adoption and Engagement
Strong adoption of new offerings like Acrobat Studio and Firefly, with MAUs for Acrobat and Express growing approximately 25% year-over-year.
Negative Updates
Competitive Pressure in AI Space
Concerns about advertising platforms like Google and Meta integrating diffusion engines directly, potentially impacting Adobe's customer base.
Challenges in New Market Adoption
While adoption of AI-first products is strong, there's an ongoing need to educate and convert enterprise customers to new AI-driven workflows.
Company Guidance
During Adobe's Q3 FY '25 earnings call, the company reported strong financial performance with record revenue of $5.99 billion, reflecting a 10% year-over-year growth. GAAP earnings per share stood at $4.18, while non-GAAP earnings per share reached $5.31, marking a 14% increase year-over-year. The call highlighted Adobe's strategic focus on AI integration across its applications, noting that AI-influenced ARR surpassed $5 billion, and AI-first products exceeded their full-year target. The company also saw significant growth in Digital Media and Digital Experience segments, with Digital Media revenue of $4.46 billion and ARR of $18.59 billion, growing 11.7% year-over-year. Digital Experience revenue was $1.48 billion, with subscription growth of 11% year-over-year. Adobe raised its FY '25 revenue and EPS targets based on this momentum, projecting total revenue between $23.65 billion and $23.70 billion and non-GAAP EPS of $20.80 to $20.85.

Adobe Financial Statement Overview

Summary
Adobe demonstrates strong financial health with high profitability, efficient capital management, and robust cash generation. Despite a slowdown in revenue growth, the company maintains a solid financial position with moderate leverage and strong returns on equity.
Income Statement
85
Very Positive
Adobe's income statement reflects strong profitability with a high gross profit margin of 89.25% and a net profit margin of 30.39% in TTM. Revenue growth is steady at 2.57% TTM, indicating consistent performance. EBIT and EBITDA margins are robust at 37.82% and 41.61% respectively, showcasing effective cost management. The company demonstrates solid revenue growth over the years, though the pace has slowed recently.
Balance Sheet
78
Positive
Adobe maintains a healthy balance sheet with a manageable debt-to-equity ratio of 0.57 TTM, reflecting moderate leverage. The return on equity is impressive at 55.19% TTM, indicating efficient use of equity capital. However, the equity ratio is not explicitly provided, which limits a full assessment of asset financing.
Cash Flow
82
Very Positive
Adobe's cash flow statement is strong, with a free cash flow growth rate of 1.72% TTM and a high operating cash flow to net income ratio of 1.06. The free cash flow to net income ratio is also robust at 0.98, indicating efficient cash generation relative to net income. The company shows consistent cash flow growth, supporting its operational stability.
BreakdownTTMDec 2024Dec 2024Dec 2023Dec 2023Dec 2022
Income Statement
Total Revenue23.18B21.50B21.50B19.41B19.41B17.61B
Gross Profit20.66B19.15B19.15B17.05B17.05B15.44B
EBITDA9.56B7.96B7.96B7.78B7.78B7.05B
Net Income6.96B5.56B5.56B5.43B5.43B4.76B
Balance Sheet
Total Assets28.75B30.23B30.23B29.78B29.78B27.16B
Cash, Cash Equivalents and Short-Term Investments5.94B7.89B7.89B7.84B7.84B6.10B
Total Debt6.64B6.06B6.06B4.08B4.08B4.63B
Total Liabilities16.98B16.13B16.13B13.26B13.26B13.11B
Stockholders Equity11.77B14.11B14.11B16.52B16.52B14.05B
Cash Flow
Free Cash Flow9.60B7.82B7.82B6.94B6.94B7.40B
Operating Cash Flow9.79B8.06B8.06B7.30B7.30B7.84B
Investing Cash Flow-1.02B149.00M149.00M776.00M776.00M-570.00M
Financing Cash Flow-11.01B-7.72B-7.72B-5.18B-5.18B-6.83B

Adobe Technical Analysis

Technical Analysis Sentiment
Positive
Last Price353.52
Price Trends
50DMA
351.67
Positive
100DMA
363.09
Negative
200DMA
385.30
Negative
Market Momentum
MACD
-0.78
Negative
RSI
54.57
Neutral
STOCH
80.79
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADBE, the sentiment is Positive. The current price of 353.52 is above the 20-day moving average (MA) of 345.87, above the 50-day MA of 351.67, and below the 200-day MA of 385.30, indicating a neutral trend. The MACD of -0.78 indicates Negative momentum. The RSI at 54.57 is Neutral, neither overbought nor oversold. The STOCH value of 80.79 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ADBE.

Adobe Risk Analysis

Adobe disclosed 23 risk factors in its most recent earnings report. Adobe reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Adobe Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
$3.89T38.3833.28%0.63%14.93%15.50%
$147.98B22.0252.87%10.69%35.19%
$438.01B613.5915.30%38.79%78.37%
$51.13B-2.70%23.31%31.04%
$86.22B36.346.61%3.21%31.64%
$807.71B65.5971.15%0.67%9.67%11.23%
$37.18B12.37-10.20%1.83%8.50%-7.62%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ADBE
Adobe
353.52
-127.52
-26.51%
MSFT
Microsoft
523.61
100.20
23.67%
ORCL
Oracle
283.33
112.61
65.96%
SNPS
Synopsys
464.18
-32.00
-6.45%
ZS
Zscaler
323.00
136.00
72.73%
PLTR
Palantir Technologies
184.63
139.66
310.56%

Adobe Corporate Events

Adobe’s Earnings Call Highlights Record Growth and AI Advancements
Sep 13, 2025

Adobe Systems Incorporated’s recent earnings call painted a picture of robust growth and strategic advancements, underscored by record revenue figures and strong AI integration. The sentiment was largely positive, driven by high customer adoption and innovation, though tempered by challenges related to competitive pressures in the AI space and the need for ongoing customer education on new technologies.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Oct 22, 2025