Adobe (ADBE) shares have struggled during 2025, dropping 23% year to date as investors worry that the power of generative artificial intelligence negatively affects its offerings for digital creators.
However, Stifel analysts believe Adobe has improved its positioning and messaging around gen-AI as the Photoshop maker prepares to deliver its fourth quarter fiscal 2025 financial results after the bell on Wednesday, Dec. 10.
“Adobe’s stance on generative Al has, at times, lacked clarity,” said Stifel analysts, led by J. Parker Lane, in an investor note. “Over the past year, investors have wrestled with questions around how Firefly models compare to competitors, the timeline and mechanics of monetization, and the possibility of industry-wide seat disruption. While not every uncertainty has been resolved, the past quarter has brought a sharper focus and increased our confidence in the trajectory ahead.”
Stifel maintains its Buy rating on Adobe but lowered its price target to $450 from $480. Stifel was encouraged by the message delivered during Adobe’s MAX creativity conference in late October.
“MAX reaffirmed our belief that the company has shifted its focus from creating the leading family of diffusion models in Firefly towards making efforts to ensure generations, regardless of the chosen model, are done within Creative Cloud,” Lane noted. “Rather than forcing a binary choice between Firefly and competitors, which could have morphed into a ‘Firefly + Creative Cloud vs. Third-Party Model + Third-Party Editing Platform’ debate, Adobe has recently positioned Creative Cloud as the indispensable aggregation and editing layer where all models live. By integrating third-party models (Gemini, Veo, OpenAl, ElevenLabs, etc.) directly into Creative Cloud, Adobe is effectively commoditizing the generation layer while reinforcing the stickiness of the application layer, in our view.”
A consensus estimate calls for Adobe to report fourth-quarter adjusted earnings per share of $5.40 and GAAP EPS of $4.28. The revenue estimate is $6.11B.