Adobe CEO to resign over investor concerns about AI

issued Friday, March 13, 2026 · 08:33 AM

[SAN FRANCISCO] Adobe Chief Executive Officer Shantanu Narayan is stepping down from his position at the top of the creative software giant amid deep doubts about the company’s ability to grow in the age of artificial intelligence (AI).

Adobe announced on Thursday, March 12, that Narayan, who has served as CEO for 18 years, will remain in his role until a successor is appointed. The 62-year-old will remain chairman of the board.

Grace Harmon, an analyst at eMarketer, said the CEO change “raises questions about strategic continuity, capital allocation priorities, and pace of innovation.” “Investors will be watching to see whether the next management team can balance disciplined execution with aggressive AI investments, especially as competition intensifies in creative and enterprise AI.”

Shares fell about 7% in extended trading after closing at $269.78 in New York. Stock prices are expected to fall by about 23% in 2026, nearing their lowest level in three years.

The company, which makes Photoshop and other products for creative arts professionals, is among a group of application software companies, including Salesforce and Atlassian, that appear to be struggling to attract new customers in the face of AI startups.

Adobe has worked to weave AI tools through its creative and marketing software. Also, in order to maintain a huge market share, we offer a unique AI model that aims to generate images without copyright risks.

Mr. Narayan oversaw a significant period of growth for the company. Since he took over in late 2007, Adobe’s annual revenue has increased nearly sixfold to about $24 billion, and the number of employees has grown from about 7,000 to more than 30,000. He is often credited with leading one of the first successful software transitions to a business model in which customers purchase recurring subscriptions for product bundles rather than one-time purchases of individual applications.

Narayan “has had a legendary legacy at Adobe,” Microsoft CEO Satya Nadella wrote on social network

Still, Naraen’s direction has been increasingly questioned by investors in recent years. Generative AI makes it easy to create visual media without expensive Adobe products. Many of the most popular new AI creative tools, such as Google’s Veo 3 AI model, are built by competitors.

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Frank Calderoni, the board’s lead independent director who is overseeing the search for Mr. Narayan’s successor, said, “We are focused on selecting the right leader for the next exciting chapter of the company’s growth, and we appreciate Mr. Shantanu’s continued leadership as CEO to ensure a smooth transition.”

Annual recurring revenue for the company’s AI-first products, such as Firefly, more than tripled in the first quarter compared to the same period last year, Narayan said on a conference call after Adobe announced its earnings results. In September, the company announced that sales from these products exceeded US$250 million.

Also Thursday, Adobe said it expects revenue for the period ending in May to be between $6.43 billion and $6.48 billion. Analysts on average expected the deal to be worth $6.43 billion, according to data compiled by Bloomberg. Earnings, excluding certain items, are expected to be between $5.80 and $5.85 per share, compared with the average estimate of $5.70.

First-quarter sales rose 12% to $6.4 billion, compared to analysts’ average estimate of $6.28 billion. Adjusted earnings for the year ended February 27 were US$6.06 per share. The average forecast was US$5.88 per share.

Creative and marketing professionals generated US$4.39 billion in subscription revenue, while business professionals and consumers generated US$1.78 billion.

Bloomberg Intelligence analyst Anurag Rana wrote that Narayen’s departure cast a shadow over an otherwise strong performance. “While Adobe’s financial metrics have shown little noticeable change since the beginning of last year, the stock price has fallen nearly 40%, which is likely the main reason for the planned CEO change.” Bloomberg