Adobe (ADBE) delivered double-digit revenue growth in the fourth quarter of fiscal 2025, generating some buzz with its recent artificial intelligence initiatives and its pending acquisition of Semrush (SEMR).
However, some analysts pointed to growth slowing in fiscal 2026 and are waiting to see how much the rise of AI can disrupt Adobe’s creativity toolset.
“Adobe delivered a solid finish to FY25 against a backdrop of GenAI disruption fears, which have driven shares down 22% YTD vs. large-cap software peers +7%,” said Morgan Stanley analysts, led by Keith Weiss, in a Thursday investor note. “In fact, Q4 results offered several encouraging indicators that GenAI adoption is driving healthier user and subscription momentum, which should moderate concerns on competition risk from diffusion engines.”
Morgan Stanley retained its Equal-weight rating on the stock but reduced its price target to $425 from $450.
“However, the improving exit velocity did not translate into an upwardly revised FY26 outlook, with total ARR guidance implying ~10.2% growth (below the 11.5% Q4 exit rate); largely in-line FY26 revenue guidance (+60bps vs Street) with growth moderating to ~9.4% from 10.5% in FY25; and EPS guidance in line with consensus at ~12% YoY growth versus 14% last year,” Weiss added.
Citi Research analysts echoed these concerns.
“While we are watching areas like Creative Freemium MAUs (+35% Y/Y) and Gen consumption (up 3x QoQ), we aren’t confident this can reverse decelerating growth trends,” said Citi analysts, led by Tyler Radke, in a note. “We expect the stock to stay range-bound with higher growth projections offset by slightly weaker OPM and continued long-term concerns around pressure at the low-end of ADBE’s creative+consumer users as AI/lower-cost tools increasingly proliferate.”
However, other financial firms remained more positive on Adobe.
Stifel reiterated its Buy rating and $450 price target.
“We walk away encouraged by AI disclosures and updates,” said Stifel analysts, led by J. Parker Lane, in a note. “Most meaningful was the disclosure that credit consumption accelerated, and increased by 3x over last quarter. The flashiest AI announcement from the night was Adobe apps for ChatGPT, which allows ChatGPT users to interface with certain (free) Adobe tools directly within ChatGPT. While not directly monetized, this makes Adobe accessible to ChatGPT’s 800mn weekly active users, with potential to be a massive top-of-funnel source.”
Meanwhile, Bank of America Securities also reiterated its Buy rating and $460 price target.
“Guidance for FY26 total ARR growth of 10.2% is down from the 11.5% exit rate in Q4, though if history repeats, the usual 1% point would mean no change to the overall growth profile,” said BofA analyst Brad Sills in a note. “Growing monetization of Firefly and top-of-funnel conversion with Adobe Express could provide sources of upside as we move through FY27. Adobe Express customer adds of 25,000 in Q4 suggest that top-of-funnel conversion is already gaining traction.”
Adobe shares edged up 1% during early market action on Thursday. Competitor Figma (FIG), which went public this summer, had declined 2%. Autodesk (ADSK) was flat and Salesforce (CRM) had inched up 0.6%.