TLDR
- Adobe reports Q3 fiscal earnings Thursday after the bell, with analysts expecting EPS of $6.08 on revenue of $6.69 billion
- The stock is down 27% this year and has fallen after 15 of the past 20 earnings reports
- AI competition concerns continue to weigh on investor sentiment despite strong results
- Adobe announced Anil Chakravarthy as incoming CEO, replacing Shantanu Narayen in December; the stock dropped 6.7% on the news
- AI-first annual recurring revenue has tripled year over year and exceeded $500 million, per the company’s last earnings call
Adobe heads into Thursday’s earnings report carrying a lot of baggage. The stock is down 27% in 2026, and investors have not been rewarding the company even when results beat expectations.
Analysts surveyed by FactSet expect Adobe to post adjusted earnings of $6.08 per share on revenue of $6.69 billion for fiscal Q3. That compares to $5.31 per share and $5.99 billion in revenue in the same quarter last year.
Revenue is expected to grow 11.8% year over year, up from 10.7% growth in the same quarter last year.
Adobe beat revenue expectations last quarter, posting $6.62 billion, up 12.7% year on year. That quarter also included a solid beat on billings estimates and stronger-than-expected EPS guidance.
Despite that track record, the stock has dropped after 15 of the past 20 earnings reports, according to Dow Jones Market Data. Beating the number has simply not been enough.
AI Concerns Keep Pressure on the Stock
The core worry for investors is whether Adobe can hold its ground as AI tools evolve and new competitors enter the creative software space.
Adobe has been pushing back with its own AI-powered product updates. On its last earnings call in June, the company said AI-first annual recurring revenue tripled year over year and passed the $500 million mark.
TD Cowen analyst Derrick Wood rates Adobe as a Hold with a $245 price target. He wrote this week that Adobe’s AI efforts “generally prioritize adoption over monetization in the medium term,” which could limit near-term revenue gains but set up stronger returns later.
Analysts covering the company have broadly held their estimates steady over the past 30 days, suggesting few expect a big surprise in either direction.
Adobe is the first in its peer group to report this earnings season, so there is no comparable data yet from other vertical software companies. Stocks in the segment have dipped around 1.5% on average over the past month, while Adobe itself is down about 6.1% in that same window.
CEO Transition Adds Another Layer of Uncertainty
Last week, Adobe announced that Anil Chakravarthy will become CEO in December. He currently leads Adobe’s Customer Experience Orchestration business and worldwide field operations.
He succeeds Shantanu Narayen, who had been at the helm for 18 years. Adobe confirmed in March that Narayen would be stepping down.
The stock dropped 6.7% on September 4 when the CEO announcement was made. Piper Sandler analyst Billy Fitzsimmons noted that given how long the search took, investors had started expecting an outside hire.
Wall Street will be watching closely to see if Chakravarthy joins the earnings call Thursday and offers any early signals about his strategic direction.
Results are due after the market closes Thursday.
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