Adobe
ADBE
$292.79
+0.44%
Adobe Inc. is a global software leader providing content creation, document management, and digital marketing solutions through its Creative Cloud, Document Cloud, and Experience Cloud platforms, serving creative professionals, marketers, and enterprises across multiple industries. As a dominant player in the creative software space, Adobe holds a near-monopoly in professional design tools like Photoshop and Illustrator, while also competing in the broader digital experience and marketing technology market against the likes of Salesforce and HubSpot. The current investor narrative centers on Adobe's transition to AI-powered workflows, with its Firefly generative AI models integrated across its product suite, but the stock has faced pressure from concerns about AI disruption to its creative software dominance and a broader SaaS sell-off, despite recent strong quarterly results and a discounted valuation that has attracted value-oriented investors.…
ADBE
Adobe
$292.79
Related headlines
Investment Opinion: Should I buy ADBE Today?
Rating: Buy. Adobe's forward PE of 10.6x and PEG of 0.55x indicate undervaluation relative to growth. Analyst consensus is Hold with an average target of $270.61, but the stock is trading above that, suggesting the market is more optimistic. The thesis is that Adobe's AI integration will drive reacceleration, and the current valuation offers a margin of safety.
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ADBE 12-Month Price Forecast
The AI assessment is bullish with medium confidence. Adobe's strong fundamentals and discounted valuation provide a favorable risk/reward. The key is whether AI integration can drive sustained growth. If revenue growth continues to accelerate and margins hold, the stock could re-rate higher. However, the AI threat to Adobe's core business is a significant risk that could derail the thesis. I would upgrade to high confidence if Q3 earnings show accelerating growth and AI monetization metrics.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Adobe's 12-month outlook, with a consensus price target around $270.61 and implied upside of -7.6% versus the current price.
Average Target
$270.61
0 analysts
Implied Upside
-7.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$190 - $380
Analyst target range
The target price range spans from a low of $190.00 to a high of $380.00, representing a wide spread of 100% from low to high, which signals high uncertainty about Adobe's future performance. The low target likely prices in continued AI disruption to Adobe's creative software franchise and potential market share losses, while the high target assumes successful monetization of AI features and a return to double-digit growth. The wide range and mixed ratings suggest that analysts are divided on the impact of AI on Adobe's business model, with some viewing it as a threat and others as an opportunity. Given the stock's recent recovery and strong fundamentals, the market appears to be pricing in a more optimistic scenario than the consensus target, but the bearish case cannot be dismissed given the competitive pressures.
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Bulls vs Bears: ADBE Investment Factors
Adobe presents a classic value-versus-growth dilemma. The bull case rests on accelerating revenue growth, a forward PE of 10.6x, and a PEG of 0.55x, suggesting the stock is undervalued. The bear case centers on AI disruption risk, slowing growth, and negative relative strength. Currently, the evidence slightly favors the bulls due to strong fundamentals and a discounted valuation, but the AI threat is the key tension. If Adobe successfully monetizes AI, the stock could re-rate higher; if not, it could lose market share and see further multiple compression.
Bullish
- Accelerating revenue growth: Q2 FY2026 revenue grew 12.69% YoY to $6.618B, up from 9.6% in Q1, indicating momentum. This acceleration suggests successful adoption of AI features and cloud subscriptions.
- Undervalued on forward earnings: Forward PE of 10.60x is a steep discount to trailing PE of 19.14x, implying the market expects significant EPS growth. PEG ratio of 0.55x signals undervaluation relative to growth.
- Strong profitability and cash flow: Gross margin is 88.6%, operating margin 36.6%, and net margin 30.0%. Free cash flow TTM is $10.63B, providing ample capital for buybacks and investments.
- Massive buyback program: Adobe leads buyback programs worth up to 25% of market cap, signaling management's confidence in undervaluation and providing EPS tailwind.
Bearish
- AI disruption threat to core franchise: Generative AI tools like Midjourney and Canva threaten Adobe's creative software dominance. Analyst low target of $190 implies a 35% downside if market share erodes.
- Slowing growth vs. historical levels: Revenue growth of 12.69% is well below Adobe's historical 20%+ growth, reflecting market maturation and increased competition. This may justify a lower multiple.
- High beta and macro sensitivity: Beta of 1.397 means the stock is 40% more volatile than the market. In a rising rate environment, high-multiple tech stocks face valuation compression.
- Negative relative strength over 1 year: Stock is down 17.64% over the past year while S&P 500 gained 18.56%, underperforming by 36.2 percentage points. This suggests persistent selling pressure.
ADBE Technical Analysis
Adobe's stock is currently in a recovery phase after a significant drawdown, trading at $291.52 as of August 28, 2026, which is 78.6% of its 52-week range (low of $190.12, high of $370.86). The 1-year price change is -17.64%, indicating a sustained downtrend over the past year, but the stock has rebounded sharply from its June lows, with a 3-month change of +12.46% and a 6-month change of +11.09%. This positioning near the lower half of its 52-week range suggests the stock is recovering from oversold conditions but still has significant overhead resistance to reclaim prior highs.
Beta
1.40
1.40x market volatility
Max Drawdown
-47.8%
Largest decline past year
52-Week Range
$190-$371
Price range past year
Annual Return
-17.9%
Cumulative gain past year
| Period | ADBE Return | S&P 500 |
|---|---|---|
| 1m | +16.9% | +2.7% |
| 3m | +11.7% | +1.0% |
| 6m | +7.2% | +12.0% |
| 1y | -17.9% | +18.9% |
| ytd | -12.2% | +12.5% |
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ADBE Fundamental Analysis
Adobe's revenue growth remains robust, with the most recent quarter (Q2 FY2026, ended May 29, 2026) reporting revenue of $6.618 billion, up 12.69% year-over-year, accelerating from the 9.6% growth seen in Q1 FY2026. The company's Digital Media segment, which includes Creative Cloud and Document Cloud, generated $4.618 billion in revenue, representing 69.8% of total revenue, while Digital Experience contributed $1.517 billion (22.9%). This growth is driven by continued adoption of its cloud subscriptions and AI-enhanced features, though the pace is slower than historical levels, reflecting market maturation and increased competition.
Quarterly Revenue
$6.6B
2026-05
Revenue YoY Growth
+12.7%
YoY Comparison
Gross Margin
89.2%
Latest Quarter
Free Cash Flow
$10.6B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ADBE Overvalued?
Given Adobe's positive net income, the PE ratio is the primary valuation metric. The trailing PE is 19.14x, while the forward PE is 10.60x, a significant discount that implies the market expects substantial earnings growth over the next year. This gap is unusually wide and suggests either aggressive earnings estimates or a potential mispricing. The PEG ratio of 0.55x indicates that the stock is undervalued relative to its expected growth rate, supporting the bull case for value investors.
PE
19.1x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 14x~66x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.1x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a debt-to-equity ratio of 0.57, which is manageable, but the current ratio of 0.996 indicates potential liquidity strain. The company's reliance on continued growth to justify its valuation is a risk; if revenue growth decelerates below 10%, the forward PE of 10.6x could expand, but earnings estimates might be cut. Additionally, the wide gap between trailing and forward PE suggests aggressive earnings expectations that could disappoint.
