Quick Overview
- Adobe is scheduled to release its fiscal Q3 earnings Thursday after market close, with Wall Street forecasting $6.08 in EPS and $6.69 billion in revenue
- Shares have tumbled 27% year-to-date and declined following 15 of the last 20 quarterly reports
- Investor anxiety around AI-driven competition persists even as the company delivers robust financial performance
- The company named Anil Chakravarthy as its next CEO to take over from Shantanu Narayen in December, triggering a 6.7% stock decline
- Management disclosed on its most recent earnings call that AI-first annual recurring revenue surpassed $500 million, representing a threefold year-over-year increase
Adobe approaches Thursday’s earnings release with significant challenges ahead. Shares have declined 27% throughout 2026, and positive earnings surprises have failed to translate into sustained stock appreciation.
Wall Street consensus compiled by FactSet projects Adobe will report adjusted earnings of $6.08 per share alongside revenue of $6.69 billion for its fiscal third quarter. These figures represent substantial growth compared to the year-ago period’s $5.31 per share and $5.99 billion in revenue.
The anticipated revenue growth rate of 11.8% year over year marks an acceleration from the 10.7% expansion recorded in the comparable quarter last year.
Last quarter, Adobe exceeded revenue projections with $6.62 billion, marking 12.7% annual growth. The company also surpassed billings forecasts and delivered EPS guidance that topped analyst estimates.
Yet this strong performance hasn’t translated into stock gains. Data from Dow Jones Market Data shows the shares declined after 15 of the previous 20 quarterly reports. Simply exceeding Wall Street’s bar hasn’t proven sufficient to drive the stock higher.
AI Competition Continues to Weigh on Investor Sentiment
The fundamental concern among market participants centers on whether Adobe can maintain its competitive position as artificial intelligence technologies advance and emerging rivals challenge its dominance in creative software.
Adobe has countered with aggressive AI-powered feature rollouts. During its June earnings conference call, management revealed that AI-first annual recurring revenue multiplied threefold year over year and crossed the $500 million threshold.
TD Cowen’s Derrick Wood maintains a Hold rating on the stock with a $245 target. In a recent note, he observed that Adobe’s AI strategy “generally prioritize adoption over monetization in the medium term,” potentially constraining immediate revenue acceleration while positioning the company for stronger long-term performance.
Wall Street analysts have largely maintained unchanged estimates during the past month, indicating limited expectation for significant earnings deviations in either direction.
As the first company in its vertical software cohort to announce results this season, Adobe lacks comparable peer data for context. The broader segment has declined approximately 1.5% on average during the past month, while Adobe’s shares have fallen roughly 6.1% over the identical timeframe.
Leadership Change Introduces Additional Uncertainty
Adobe disclosed last week that Anil Chakravarthy will assume the CEO role this December. Chakravarthy currently oversees Adobe’s Customer Experience Orchestration division and global field operations.
He will replace Shantanu Narayen, who guided the company for 18 years. Adobe initially announced Narayen’s planned departure in March.
Shares plunged 6.7% on September 4 following the CEO announcement. Piper Sandler’s Billy Fitzsimmons observed that the extended search duration had led investors to anticipate an external candidate rather than an internal promotion.
Analysts will pay close attention to whether Chakravarthy participates in Thursday’s earnings call and provides any preliminary indications regarding his strategic priorities.
The company will announce results after Thursday’s closing bell.
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