Adobe (ADBE) AI Stock Analysis

• Market Cap: $108.03B
• Dividend Yield: N/A
• Average Volume (3M): 5.56M
• Price to Earnings (P/E): 15.5
• Beta (1Y): 1.01
• Revenue Growth: 10.53%
• EPS Growth: 34.24%
• Country: US
• Employees: 30,709
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 5.50
• Shares Outstanding: 410,500,000
• 10 Day Avg. Volume: 5,675,000
• 30 Day Avg. Volume: 5,559,382
• PEG Ratio: 0.55
• Price to Book (P/B): 11.73
• Price to Sales (P/S): 5.74
• P/FCF Ratio: 13.84
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 4.40
• Enterprise Value/Gross Profit: 4.93
• Enterprise Value/Ebitda: 10.72
• 1Y Price Target: $421.52
• Price Target Upside: 62.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 74 Outperform
• Price Target: $290.00 ▲(12.14% Upside)
• Action: Downgraded Date: 01/28/26
• Date: Action: Downgraded 01/28/26

The score is driven primarily by strong financial performance and a constructive earnings outlook with confident FY2026 guidance and continued AI-led momentum. This is partially offset by weak technical conditions (price below major moving averages and negative MACD) and only moderate valuation support, with corporate governance updates a smaller positive factor.

Positive Factors

High margins & cash generation

Adobe's very high gross and net margins, together with operating cash flow exceeding net income and near‑par free cash flow conversion, provide durable internal funding for R&D, AI investment, share programs and M&A without heavy reliance on external financing, supporting long‑term strategic execution and resilience.

Large recurring revenue base & ARR scale

Adobe's substantial ARR and record FY2025 revenue reflect a deep subscription footprint across Creative and Document suites. This recurring model yields predictable cash flows, high retention and cross‑sell potential, underpinning multi‑year revenue visibility and allowing steady investment in product enhancements and enterprise sales capacity.

AI-led product differentiation & partnerships

Ongoing AI integration (Firefly, Acrobat AI Assistant) and strategic cloud/AI partnerships strengthen product differentiation and stickiness. These capabilities drive higher usage (e.g., rapid growth in generative credit consumption) and create durable competitive moats across creative, document and marketing workflows that support sustained ARR growth.

Negative Factors

Slowing revenue and ARR growth

Trailing revenue growth has decelerated materially versus prior years and management trimmed the ARR growth target for FY2026. Slower top‑line expansion limits operating leverage and raises the bar for sustaining margin improvement, increasing the importance of execution on AI monetization and enterprise upsell to reaccelerate durable growth.

Pending SEMRush acquisition & regulatory risk

The SEMRush deal introduces regulatory approval uncertainty and integration risk that could divert management attention, create execution costs, and delay expected synergies. If approvals are protracted or integration underperforms, projected ARR and marketing product expansion could be slower than modeled, impacting medium‑term growth.

Declining stockholders' equity

A decline in stockholders' equity, even with a manageable debt/equity of 0.56, reduces the equity cushion available for shocks and may reflect buybacks or cumulative payouts. Over time a shrinking equity base can limit capital flexibility and increase sensitivity to margin or revenue shocks, especially if growth needs more external funding.

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 generates revenue primarily through subscription-based services. The majority of its income comes from the Digital Media segment, specifically from Creative Cloud subscriptions, which offer users access to a wide range of creative software and services. Additionally, the Digital Experience segment contributes significantly to revenue through enterprise solutions that help businesses manage and analyze customer experiences. Adobe also earns revenue from its Document Cloud services. Key partnerships with various organizations, including educational institutions and enterprises, enhance its market reach and contribute to its earnings. The transition to a subscription model has led to a steady increase in recurring revenue, which is a core aspect of Adobe's financial strategy.

Adobe Financial Statement Overview

Summary

Strong overall fundamentals supported by high profitability (TTM gross margin 89.14%, net margin 30.01%) and robust operating efficiency (EBITDA margin 41.24%). Cash generation is healthy with strong cash conversion (operating cash flow to net income 1.06). Key watch-outs are slowing TTM revenue growth (2.54%) and declining stockholders’ equity.

Income Statement

Adobe's income statement reflects strong profitability and consistent revenue growth. The TTM (Trailing-Twelve-Months) gross profit margin is impressive at 89.14%, indicating efficient cost management. The net profit margin has improved to 30.01%, showcasing enhanced profitability. Revenue growth is steady at 2.54% in the TTM, although it has slowed compared to previous years. The EBIT and EBITDA margins are robust at 37.57% and 41.24%, respectively, highlighting strong operational efficiency.

Balance Sheet

Adobe maintains a solid balance sheet with a manageable debt-to-equity ratio of 0.56 in the TTM, reflecting prudent leverage. The return on equity is impressive at 55.19%, indicating effective use of shareholder funds. The equity ratio stands at 39.40%, suggesting a stable capital structure. However, the decrease in stockholders' equity over the years could be a point of concern.

Cash Flow

Adobe's cash flow statement shows healthy cash generation, with a free cash flow growth rate of 2.64% in the TTM. The operating cash flow to net income ratio is strong at 1.06, indicating efficient cash conversion. The free cash flow to net income ratio is high at 0.98, demonstrating effective cash management. Overall, Adobe's cash flow position is robust, supporting its operational and strategic initiatives.

Breakdown	Nov 2025	Nov 2024	Nov 2023	Nov 2022	Nov 2021
Income Statement
Total Revenue	23.77B	21.50B	19.41B	17.61B	15.79B
Gross Profit	21.06B	19.15B	17.05B	15.44B	13.92B
EBITDA	9.75B	7.96B	7.78B	7.05B	6.67B
Net Income	7.13B	5.56B	5.43B	4.76B	4.82B
Balance Sheet
Total Assets	29.50B	30.23B	29.78B	27.16B	27.24B
Cash, Cash Equivalents and Short-Term Investments	6.59B	7.89B	7.84B	6.10B	5.80B
Total Debt	6.65B	6.06B	4.08B	4.63B	4.67B
Total Liabilities	17.87B	16.13B	13.26B	13.11B	12.44B
Stockholders Equity	11.62B	14.11B	16.52B	14.05B	14.80B
Cash Flow
Free Cash Flow	9.85B	7.82B	6.94B	7.40B	6.89B
Operating Cash Flow	10.03B	8.06B	7.30B	7.84B	7.22B
Investing Cash Flow	-1.19B	149.00M	776.00M	-570.00M	-3.54B
Financing Cash Flow	-11.06B	-7.72B	-5.18B	-6.83B	-4.30B

Adobe Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 258.61
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Positive
• STOCH: Neutral

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 258.61 is below the 20-day moving average (MA) of 276.36, below the 50-day MA of 311.95, and below the 200-day MA of 349.64, indicating a bearish trend. The MACD of -14.81 indicates Negative momentum. The RSI at 29.11 is Positive, neither overbought nor oversold. The STOCH value of 37.07 is Neutral, 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
ADBE	74 Outperform	$108.03B	15.52	55.43%	―	10.53%	34.24%
MSFT	74 Outperform	$2.97T	25.00	34.39%	0.71%	16.67%	28.60%
SNPS	69 Neutral	$84.62B	55.14	7.16%	―	12.62%	-45.12%
ADSK	64 Neutral	$48.70B	44.48	40.33%	―	15.62%	2.59%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
U	54 Neutral	$8.03B	-19.34	-12.53%	―	-8.23%	48.57%
FIG	53 Neutral	$11.99B	-10.10	―	―	―	―

Adobe Corporate Events

Adobe Adopts 2026 Performance-Based Executive Compensation Programs

On January 26, 2026, Adobe’s board-level Executive Compensation Committee approved a 2026 Performance Share Program that ties executive equity awards to a three-year relative total shareholder return versus NASDAQ-100 peers and annual Net New Sales goals for fiscal years 2026–2028, with payouts ranging from 0% to 200% of target and all earned shares cliff-vesting in early 2029, subject to continued service and clawback provisions. On the same date, the committee set a 2026 Executive Annual Incentive Plan that conditions cash bonuses for top executives on achieving at least 95% of revenue and EPS targets, with potential payouts up to 155% of target, and adopted an Executive Officer Cash Severance Policy that caps new cash severance arrangements at 2.99 times salary plus target bonus without shareholder ratification, collectively reinforcing a pay-for-performance framework, long-term retention and governance discipline on executive severance costs.

The most recent analyst rating on (ADBE) stock is a Hold with a $340.00 price target. To see the full list of analyst forecasts on Adobe stock, see the ADBE Stock Forecast page.