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Takeaways
- Adobe shares tumbled Thursday on the company's underwhelming outlook.
- However, analysts said they they're still bullish on the stock, pointing to its potential for AI-driven growth.
- More AI-related updates could come next week at the company's Adobe Summit event.
Adobe (ADBE), shares fell Thursday after the company issued a lower-than-expected outlook. Analysts, however, remain bullish, pointing out the potential for AI driven growth.
Jefferies analysts said they were surprised by the stock's sharp decline after the results, which they felt were "positive enough to offset the negatives," and added that "AI adoption is trending well," with Adobe poised for AI-driven revenue gains. The analysts maintained a “buy” rating and $650 price target for the stock, suggesting over 70% upside from Thursday's close.
Bank of America analysts reduced their price target, from $605 down to $528. They kept the “buy” rating and said that they expect Adobe “to be on a path” towards better AI monetization. Analysts highlighted that monthly active Photoshop users and Lightroom AI users both increased over the period.
According to a transcript provided by AlphaSense of Adobe’s earnings call, the company reported annualized AI recurring revenue of $125 million by the end the quarter. CEO Shantanu Narayen said he expected that figure to double by 2025.
Adobe Summit, the company’s annual AI event, is scheduled for next week. According to one analyst, the event could be more informative than quarterly results.
Adobe shares fell nearly 14% on Thursday, closing at $377.84. They've lost about a third of their value in the past 12 months.
UPDATE—March 13, 2025: This article has been updated since it was first published to reflect more recent share price values.
