Adobe’s AI Ambitions Face Market Scrutiny Amid Diverging Performance

Adobe finds itself navigating conflicting currents. While the software giant's analytics division demonstrates robust performance and the company moves to acquire SEO specialist Semrush for $1.9 billion, its shares have shed more than a third of their value since January. Market experts remain divided on whether Adobe's artificial intelligence transformation will ultimately succeed or stall, leaving investors questioning if a recovery is imminent or if further declines await.

With institutional ownership standing at 81.79%, major investors reveal sharply contrasting positions. UBS Asset Management significantly increased its stake by 67.1%, while D.E. Shaw amplified its position by a substantial 367.5%. Conversely, Capital World Investors reduced their holdings by 38.1%, and Polen Capital Management sold nearly half of its position.

These divergent moves reflect underlying uncertainty about Adobe's capacity to successfully transition its business model toward AI-driven solutions or whether it will lose ground to more agile competitors. The company exceeded expectations with third-quarter earnings of $5.31 per share, yet its battered stock price continues to struggle toward recovery.

E-Commerce Analytics Demonstrate Strength

Adobe's analytics division provided compelling evidence of its market dominance during the recent Black Friday shopping event. U.S. consumers spent $8.6 billion online, representing a 9.4% year-over-year increase. By tracking over one trillion visits to U.S. retail websites, Adobe projects Cyber Monday will set a new record with $14.2 billion in sales.

These impressive metrics underscore Adobe's commanding position in e-commerce data tracking. However, while analytics performance shines, the company's core creative software business faces mounting competitive pressure from specialized AI tools.

Should investors sell immediately? Or is it worth buying Adobe?

Strategic Acquisition Aims to Bolster AI Capabilities

Adobe's planned acquisition of Semrush at $12 per share represents a strategic move to enhance its brand visibility and search engine optimization offerings. The transaction, expected to close during the first half of 2026, has already secured more than 75% of Semrush's voting rights.

Key strategic elements include:
- Emphasis on Generative Engine Optimization (GEO)
- Integration of SEO capabilities across Adobe's platform
- Total transaction value of $1.9 billion in cash

Anil Chakravarthy, President of Adobe's Digital Experience Business, emphasized that "generative AI is reshaping brand visibility." The acquisition aims to provide marketers with comprehensive insights across owned channels, large language models, and traditional search engines.

Wall Street Analysts Remain Divided

Financial analysts present conflicting assessments of Adobe's prospects. Piper Sandler maintains a $470 price target, while DA Davidson suggests $600 represents a feasible valuation. In contrast, TD Cowen warns of slowing revenue growth and maintains a hold rating with a $420 target.

Barclays highlights that Adobe's AI-based annual recurring revenue has more than doubled. Evercore ISI praises the company's solid revenue and profit figures. Despite these positive notes, skepticism persists, with the consensus price target standing at just $428.96—significantly below previous highs.