Adobe is scheduled to report fiscal third-quarter earnings after the U.S. market closes on Thursday, with Wall Street expecting adjusted earnings of $6.08 per share on revenue of approximately $6.69 billion. That compares with $5.31 per share and $5.99 billion in revenue in the year-ago quarter, implying revenue growth of about 11.8% year over year.
Despite a strong fundamental track record, investor sentiment remains cautious. Adobe stock closed at $254.86 on Wednesday and is down roughly 27% in 2026. According to Dow Jones Market Data, shares have fallen after 15 of the past 20 earnings reports, even though the company has beaten both revenue and earnings expectations in nine of the past 10 quarters.
The company’s own guidance calls for third-quarter revenue of $6.67 billion to $6.72 billion and non-GAAP earnings of $6.05 to $6.10 per share. However, strategists argue that simply clearing those bars may not change the narrative. Freedom Capital Markets strategist Jay Woods said Adobe needs to change the investor conversation, not just deliver another earnings beat.
Generative AI remains the central question. Investors are weighing whether tools such as Firefly, Premiere, After Effects and Acrobat expand Adobe’s growth opportunity or weaken the economics of its core creative software. Adobe reported that AI-first annual recurring revenue exceeded $500 million at the end of the second quarter, more than tripling from a year earlier, while total Adobe ARR reached $27.1 billion and Firefly ARR approached $300 million after about 50% sequential growth.
Still, Wall Street is separating adoption from monetization. Goldman Sachs software analyst Gabriela Borges said Adobe is still figuring out where it stands in the process of reducing technical debt, innovating and monetizing AI products. Adobe has deliberately expanded freemium access, accepting near-term pressure on ARR to build a larger user funnel.
Recurring revenue growth is seen as the clearest link between AI adoption and valuation. Adobe currently expects total ending ARR to grow 10.2% in fiscal 2026. RBC Capital analyst Matthew Swanson raised his price target to $315 from $285 while maintaining an Outperform rating, noting that a path to ARR re-acceleration remains key for multiple expansion.
Leadership transition adds another layer of uncertainty. Anil Chakravarthy will become chief executive on December 1, with Shantanu Narayen moving to executive chair. The stock dropped 6.7% on September 4 when the CEO announcement was made, as investors had reportedly started to expect an outside hire after the long search. Piper Sandler analyst Billy Fitzsimmons noted that Wall Street will watch whether Chakravarthy joins the earnings call and offers early signals on strategic direction.
TD Cowen analyst Derrick Wood rates Adobe as Hold with a $245 price target and wrote 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. Adobe is the first in its peer group to report this earnings season, and broader vertical software stocks have dipped about 1.5% over the past month, while Adobe itself is down about 6.1% in the same window.
