ADBE changes
Pick any two versions below to diff them.
- Price
- $245.20 → $237.60(−3.1%)
- Discount category
- Below intrinsic value → Well below intrinsic value
- Next earnings
- Dec 10, 2026 → Dec 9, 2026
- Next earnings is estimate
- Yes → No
- Thesis
- The market fears that generative AI tools from other companies will make Adobe's creative software less necessary. If people can make images, video and designs with simple AI prompts, demand for paid Creative Cloud seats and their prices can fall. Changes in leadership add doubt. The CFO left on June 15, 2026, the head of the creativity and productivity business left on September 27, 2026, and Anil Chakravarthy becomes CEO on December 1, 2026. The results so far do not show a decline. In Q3 FY2026, revenue grew 13%, total ARR grew 11.2% to $27.50 billion, AI-first ARR grew more than 150%, and Adobe reached 1 billion monthly active users. For the gap to close, four things must be true. Total ARR must keep growing at about 10% or more, as in the FY2026 target of 10.2%, also without the help of acquisitions such as Semrush. AI-first ARR must keep growing fast enough to replace any lost seat revenue. The new free and low-price users must turn into paid subscribers. The non-GAAP operating margin must stay near the 45% target for FY2026. The first evidence comes with the Q4 FY2026 removed: report, estimated for about added: report on December removed: 10, added: 9, 2026, which should also give the FY2027 targets under the new CEO. The question about AI is a long one, so the gap can close only slowly, over the next two to three years of results.
- Checkpoints
- Dec removed: 10, 2026 (estimate): added: 9, 2026: Q4 FY2026 earnings and FY2027 targets. Pending. Watch: Total ARR growth of about 10.2% for FY2026 and FY2027 targets with continued double-digit ARR growth pass; ARR growth below target or FY2027 targets with slower growth fail. Mar 15, 2027 (estimate): Q1 FY2027 earnings: first quarter under the new CEO. Pending. Watch: AI-first ARR that keeps growing fast and a non-GAAP operating margin near 45% pass; slower total ARR growth or a falling margin fail.
- Recent events
- removed: Oct 12, 2026: Wells Fargo cut its rating on Adobe to Underweight. It cited a survey of 100 chief information officers in which companies plan to move part of their IT budgets to AI, slower organic growth, weaker pricing power and risk from the management changes. HSBC cut its rating to Hold in the same week. The stock fell about 4% on October 12. Sep 10, 2026: Adobe reported record Q3 FY2026 results. Revenue grew 13% to $6.76 billion. GAAP EPS was $4.62 and non-GAAP EPS was $6.13. Total ARR was $27.50 billion, AI-first ARR grew more than 150%, and users passed 1 billion a month. Adobe raised its FY2026 targets to revenue of $26.576 billion to $26.626 billion and non-GAAP EPS of $24.45 to $24.50. Sep 3, 2026: Adobe announced that Anil Chakravarthy, the head of its Customer Experience Orchestration business, becomes President and CEO on December 1, 2026. Shantanu Narayen will then retire as CEO and become Executive Chair. David Wadhwani, President of the Creativity & Productivity business, stepped down on September 27, 2026. Jun 24, 2026: Adobe agreed to buy Topaz Labs, a private company with AI models that improve video and images, for about $340 million, mostly in cash. Adobe expects the deal to close in Q4 FY2026. Jun 11, 2026: Adobe reported Q2 FY2026 results. Revenue grew 13% to $6.62 billion, and total ARR was $27.10 billion, including about $480 million from Semrush. GAAP results included a $70 million goodwill impairment for the Publishing & Advertising unit. CFO Dan Durn resigned, effective June 15, 2026, and Steve Day became interim CFO. Apr 28, 2026: Adobe completed its purchase of Semrush Holdings, a brand visibility platform, for $1.87 billion, mostly in cash. Apr 21, 2026: Adobe's board approved a new share repurchase program of up to $25 billion, which runs through April 30, 2030.