Mixed Signals for Adobe as AI Rivalry Intensifies

Adobe is navigating a challenging market landscape, delivering quarterly results that surpass expectations while investors and analysts remain divided on the stock’s fair value. On Friday, HSBC adjusted its price target, signaling renewed Wall Street scrutiny of Adobe’s positioning in a climate of mounting AI competition.

Market sentiment around Adobe remains unsettled. Across 26 brokerages covering the name, 11 recommend a Hold, 10 urge a Buy, 1 signals a Strong Buy, and 4 suggest a Sell. Broader surveys of analysts, however, tend to favor an Overweight or Buy stance. The discord persists even after sturdy financials, with some observers warning that fresh AI tools could pressure Adobe’s core businesses.

Strong Results, Cautious Outlook

In the latest quarter, Adobe posted revenue of 6.19 billion USD, up 10.5% from the prior year and above the Street’s expectation of 6.11 billion. For fiscal 2026, the company is guiding to earnings per share in the range of 23.30 to 23.50 USD. The first-quarter 2026 projection stands at 5.85 to 5.90 USD per share.

Key figures at a glance:
- Quarterly revenue: 6.19 billion USD (+10.5% YoY)
- 2026 EPS guidance: 23.30–23.50 USD
- Q1 2026 EPS guidance: 5.85–5.90 USD

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

AI Strategy and Legal Risks

Strategically, Adobe is expanding its collaboration with Cognizant to weave generative AI more deeply into enterprise workflows, aiming to accelerate monetization of AI capabilities with large corporate clients.

At the same time, a class-action lawsuit has been filed alleging that Adobe used copyrighted books for training certain AI models. If proven, the accusations could carry legal and reputational consequences. The stock has recently softened as investors weigh these risks.

Looking ahead, the coming months will reveal whether Adobe’s AI initiatives can offset rising competitive pressures. Legal developments remain an area of uncertainty for the shares.