Adobe (ADBE) AI Stock Analysis

• Market Cap: $158.39B
• Dividend Yield: N/A
• Average Volume (3M): 4.18M
• Price to Earnings (P/E): 23.8
• Beta (1Y): 1.13
• Revenue Growth: 10.69%
• EPS Growth: 40.10%
• Country: US
• Employees: 30,709
• Sector: Technology
• Sector Strength: 89
• Industry: Software - Infrastructure
• EPS (TTM): 5.06
• Shares Outstanding: 424,200,000
• 10 Day Avg. Volume: 3,913,544
• 30 Day Avg. Volume: 4,182,712
• PEG Ratio: 8.22
• Price to Book (P/B): 14.56
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 17.43
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 1.84
• Enterprise Value/Gross Profit: 7.93
• Enterprise Value/Ebitda: 4.75
• 1Y Price Target: $482.65
• Price Target Upside: 32.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 29

• Rating: 76 Outperform
• Price Target: $427.00 ▲(17.52%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

Competitive Advantage

The agentic AI cycle for the DX business has the potential to widen Adobe's competitive moat in the core creative professional market segment through more robust workflow automation.

Strategic Partnerships

Strategic partnerships with companies like AWS, Microsoft, SAP, Workday, and ServiceNow enhance agentic use cases across customer service, ERP/HR, and data management, showing strong collaborative potential.

Negative Factors

Economic Conditions

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

Market Competition

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

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 exhibits strong financial performance with consistent revenue growth, high profitability margins, and effective cash flow management. The company has low leverage and a high return on equity, which enhances its financial stability and positions it well for sustainable growth.

Income Statement

Adobe's income statement reflects strong financial performance with consistent revenue growth, highlighted by a 5.11% revenue growth rate in the TTM (Trailing-Twelve-Months) over the previous year. The company maintains solid profitability with a gross profit margin of 89.23% and a net profit margin of 30.39% in the TTM. Adobe's EBIT and EBITDA margins are also robust at 36.37% and 38.57% respectively, indicating efficient operational management.

Balance Sheet

Adobe has a strong balance sheet characterized by a low debt-to-equity ratio of 0.035 in the TTM, reflecting minimal leverage and a solid equity base. The company's return on equity stands at 60.01%, showcasing strong profitability relative to shareholder investments. However, the equity ratio has decreased slightly to 40.74%, pointing to a moderate reduction in equity relative to total assets.

Cash Flow

Adobe's cash flow statements reveal robust cash generation capabilities with a free cash flow growth rate of 20.61% in the TTM. The operating cash flow to net income ratio is healthy at 1.40, indicating strong operating efficiency. Furthermore, the free cash flow to net income ratio of 1.37 underscores the company's ability to convert revenue into cash effectively.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.60B	21.50B	19.41B	17.61B	15.79B	12.87B
Gross Profit	20.17B	19.15B	17.05B	15.44B	13.92B	11.15B
EBITDA	8.72B	8.03B	6.65B	7.05B	6.67B	5.13B
Net Income	6.87B	5.56B	5.43B	4.76B	4.82B	5.26B
Balance Sheet
Total Assets	28.11B	30.23B	29.78B	27.16B	27.24B	24.28B
Cash, Cash Equivalents and Short-Term Investments	5.71B	7.89B	7.84B	6.10B	5.80B	5.99B
Total Debt	397.00M	6.06B	4.08B	4.63B	4.67B	4.71B
Total Liabilities	16.66B	16.13B	13.26B	13.11B	12.44B	11.02B
Stockholders Equity	11.45B	14.11B	16.52B	14.05B	14.80B	13.26B
Cash Flow
Free Cash Flow	9.44B	7.82B	6.94B	7.40B	6.89B	5.31B
Operating Cash Flow	9.62B	8.06B	7.30B	7.84B	7.22B	5.73B
Investing Cash Flow	-790.00M	149.00M	776.00M	-570.00M	-3.54B	-414.00M
Financing Cash Flow	-11.58B	-7.72B	-5.18B	-6.83B	-4.30B	-3.49B

Adobe Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 363.35
• 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 363.35 is below the 20-day moving average (MA) of 383.48, below the 50-day MA of 395.32, and below the 200-day MA of 437.22, indicating a bearish trend. The MACD of -7.32 indicates Positive momentum. The RSI at 32.69 is Neutral, neither overbought nor oversold. The STOCH value of 11.81 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	$3.74T	38.75	33.61%	0.66%	14.13%	12.10%
FTNT	77 Outperform	$76.69B	40.77	205.91%	―	13.83%	58.13%
ADBE	76 Outperform	$158.39B	23.75	52.25%	―	10.69%	40.10%
ORCL	76 Outperform	$662.35B	54.13	85.36%	0.85%	8.38%	16.96%
CRWD	74 Outperform	$127.99B	721.64	-5.76%	―	25.94%	-226.80%
PANW	74 Outperform	$137.40B	109.91	21.16%	―	13.91%	-50.96%
Sector *	56 Neutral	HK$13.86B	5.36	-5.75%	5.41%	9.34%	-42.23%

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.