Adobe (ADBE) AI Stock Analysis

• Market Cap: $147.52B
• Dividend Yield: N/A
• Average Volume (3M): 4.23M
• Price to Earnings (P/E): 21.1
• Beta (1Y): 1.04
• 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: 418,600,000
• 10 Day Avg. Volume: 5,447,477
• 30 Day Avg. Volume: 4,228,314
• PEG Ratio: 0.55
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 5.74
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.91
• Enterprise Value/Revenue: 5.67
• Enterprise Value/Gross Profit: 6.36
• Enterprise Value/Ebitda: 13.82
• 1Y Price Target: $459.96
• Price Target Upside: 30.51% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 24
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: $395.00 ▲(12.08% Upside)

Adobe's strong financial performance and positive earnings call are the primary drivers of its high score. The company's robust profitability, efficient cash management, and strategic focus on AI innovations position it well for future growth. Technical analysis and valuation provide a balanced view, with some caution due to mixed technical signals and fair valuation.

Positive Factors

AI Innovation

Adobe's focus on AI innovation enhances its competitive edge, integrating AI into products like Firefly and Acrobat, driving user engagement and expanding market reach.

Strong Financial Performance

Record revenue growth underscores Adobe's robust market position and effective business strategy, supporting long-term financial stability and investment in innovation.

Strategic Partnerships

Strategic partnerships with tech giants enhance Adobe's technological capabilities and market penetration, fostering innovation and expanding its customer base.

Negative Factors

Decelerating Revenue Growth

Slowing revenue growth may indicate market saturation or increased competition, potentially impacting Adobe's ability to maintain its growth trajectory.

Acquisition Challenges

Pending regulatory approval and integration challenges for SEMRush could delay strategic benefits and create operational uncertainties for Adobe.

Slight Decrease in ARR Growth Target

A lower ARR growth target suggests potential challenges in sustaining subscription growth, which could impact long-term revenue and profitability.

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

Adobe exhibits strong financial health with excellent profitability, efficient cost management, and robust cash generation. The income statement shows impressive margins, and the balance sheet reflects prudent leverage. However, the slowing revenue growth and declining stockholders' equity are areas to monitor.

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	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 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: Positive
• Last Price: 352.42
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 352.42 is above the 20-day moving average (MA) of 340.67, above the 50-day MA of 337.79, and below the 200-day MA of 364.07, indicating a neutral trend. The MACD of 6.38 indicates Negative momentum. The RSI at 58.72 is Neutral, neither overbought nor oversold. The STOCH value of 74.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ADBE.

Adobe Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADBE	80 Outperform	$147.52B	21.10	55.43%	―	10.53%	34.24%
MSFT	79 Outperform	$3.62T	34.64	32.24%	0.71%	15.59%	15.89%
ADSK	74 Outperform	$63.09B	57.77	40.33%	―	15.62%	2.59%
SNPS	73 Outperform	$90.97B	59.26	7.16%	―	12.62%	-45.12%
U	65 Neutral	$19.34B	-43.06	-13.64%	―	-8.23%	48.57%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Adobe Corporate Events

Adobe’s Earnings Call Highlights Record Growth and AI Advancements

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.