Adobe’s AI Monetization Under Scrutiny Ahead of Earnings

Wall Street's confidence in Adobe's near-term strategy appears to be wavering as the software giant approaches its fourth-quarter earnings report on December 10th. A key concern among analysts is the company's ability to rapidly convert its ambitious artificial intelligence features into substantial revenue streams.

Recent analyst actions highlight a market divided. In a notable move, Citigroup reduced its price target on Thursday, cutting it from $400 to $366 while maintaining a Neutral rating. The downgrade reflects growing skepticism about the pace at which Adobe's AI investments will translate to financial performance.

This caution is not universal. DA Davidson reaffirmed a bullish $500 price target on November 20th. However, other major firms have tempered their outlooks. Wells Fargo lowered its target from $470 to $420, and Mizuho adjusted its forecast down from $410 to $390. A more significant shift came from Morgan Stanley in September, which downgraded the stock from "Overweight" to "Equal-Weight" and slashed its price target from $520 to $450.

The consensus view, based on 29 analysts, currently stands at "Hold" with an average price target of $427.70. This figure implies a potential upside of approximately 30% from current trading levels. The recommendations break down into 14 Buy ratings, 11 Hold ratings, and 3 Sell recommendations.

High Stakes for Q4 Results

The upcoming earnings release carries significant weight. Market expectations for the quarter are precise:

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

• Earnings Per Share (EPS): The consensus estimate is $5.39, representing a 12.5% year-over-year increase. Adobe's own guidance projects EPS between $5.35 and $5.40.
• Revenue: Analysts anticipate sales of $6.11 billion, which would equate to growth of roughly 9%.

Adobe enters this report from a position of recent strength. The company's third-quarter results exceeded expectations, with EPS of $5.31 beating estimates by 13 cents. Revenue reached $5.99 billion, growing 10.7% year-over-year, while the net margin remained robust at 30%.

Strategic Acquisition to Bolster Portfolio

In a strategic move announced in mid-November, Adobe revealed plans to acquire the SEO specialist Semrush for $1.9 billion in cash. This acquisition is widely viewed as an effort to strengthen Adobe's marketing technology portfolio, particularly as AI-powered search tools like ChatGPT and Google Gemini gain prominence.

The deal received a positive assessment from Piper Sandler, whose analysts see it as a logical expansion of Adobe's digital experience business. The transaction is expected to be finalized in the first half of 2026.

A Pivotal Report for Investor Confidence

All eyes will be on Adobe's management when they report after the market closes on December 10th (23:00 CET). Investors will be listening closely for clear answers on several pressing questions: the tangible monetization timeline for new AI capabilities, the health and growth trajectory of the flagship Creative Cloud subscription business, and the company's strategic perspective for fiscal 2026.

The pressure for a strong showing is considerable. Adobe's share price has declined by more than 25% since the start of the year, placing CEO Shantanu Narayen under intense scrutiny to deliver a convincing path forward.