TLDR
- Adobe increased advertising spending by over 30% to $1.4 billion in 2025, exceeding many tech peers as a percentage of revenue
- The stock has dropped more than 50% since early 2024, hitting its lowest closing price since 2019
- The company is heavily promoting AI-powered features in Photoshop, Acrobat, and Adobe Express to compete with Canva and other rivals
- Adobe announced it will shut down Adobe Animate on March 1, creating customer backlash
- Multiple analysts recently cut price targets or downgraded the stock, though consensus remains “Hold” with a $391.81 average target
Adobe is spending more on advertising than ever before. The company poured $1.4 billion into ads during 2025, a jump of over 30% from the previous year.
That’s a bigger slice of revenue than major players like Salesforce and Meta. It even topped consumer brands like Uber and Netflix.
The spending surge comes as Adobe faces growing competition. Simpler design tools from companies like Canva have gained ground. AI media generators are also eating into Adobe’s traditional stronghold in creative software.
The stock tells a rough story. Adobe shares have fallen more than 50% since early 2024. The company recently hit its lowest closing price since 2019.
On Wednesday, the stock dropped to a new 52-week low of $271.02. Trading volume was heavy, and the market cap now sits near $111.6 billion.
Adobe’s push centers on AI features. Television ads show how Acrobat now uses AI to generate reports and marketing text. One YouTube campaign features a surreal video made entirely with Adobe’s AI tools, including a dolphin swimming in a hotel pool.
The company has placed ads on billboards and Lyft rental bikes. One Adobe Express ad promises “Quick. Easy. On-brand.”
Marketing Push Follows New CMO Hire
The advertising ramp-up came with the appointment of Lara Balazs as chief marketing officer. She previously led marketing at Intuit, known for aggressive consumer advertising.
Intuit spends about 11% of revenue on ads, similar to consumer giants like Coca-Cola and Procter & Gamble. Adobe is moving in that direction as it tries to defend market share.
The company says its Firefly AI tools have been used tens of billions of times. But investors want to see that usage turn into revenue growth.
Operating expenses have climbed faster in recent years. The gap between gross profit and costs has narrowed as Adobe fights to keep customers.
Mixed News Flow Weighs on Sentiment
Several recent developments have shaped investor views. Semrush shareholders approved a merger agreement with Adobe, which should expand the company’s marketing and data capabilities.
Adobe is also offering unlimited generations in its Firefly AI studio through March 16. That could accelerate adoption of paid AI workflows.
But the news hasn’t all been positive. Adobe announced it will discontinue Adobe Animate, shutting it down March 1. The move sparked customer backlash and could lead to churn in niche creator communities.
Multiple firms have cut price targets recently. UBS, Baird, and BMO all reduced their outlooks, with BMO downgrading the stock to Market Perform.
Broader tech weakness hasn’t helped. Apple’s new creator tools bundle has raised questions about future competition, though analysts say Apple isn’t an Adobe killer yet.
Wall Street currently holds a consensus “Hold” rating on the stock. The average price target sits at $391.81, implying upside from current levels.
One research analyst rates the stock a Strong Buy. Ten have assigned Buy ratings, eleven issued Hold ratings, and five gave Sell ratings.
Adobe posted earnings of $5.50 per share in its most recent quarter, beating the consensus estimate of $5.40. Revenue came in at $6.19 billion, topping expectations of $6.11 billion.
The company set Q1 FY2026 EPS guidance at $5.85 to $5.90. Full-year guidance ranges from $23.30 to $23.50 per share.
CFO Daniel Durn sold 1,646 shares on January 27 at an average price of $294.85. Insiders now own 0.16% of the stock.
Institutional investors own 81.79% of the company’s stock, with several funds adjusting positions in the fourth quarter.
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