adobeADBE is benefiting from growth in the Business Professional and Consumer (“BPC”) sector driven by AI innovation and user expansion. Business Professional and Consumer subscription revenue increased 16% year over year (+15% at constant currency) to $1.78 billion in the first quarter of fiscal 2026. This makes this segment one of Adobe’s fastest growing segments, outpacing the company’s overall growth of approximately 11-12%.
Adobe’s investments in conversational experiences in Acrobat and generative AI models in Express are notable. Together, these two products enable business professionals and consumers to gain insights and create presentations faster. Adobe has a clear focus on business professionals, including knowledge workers, small businesses, corporate teams, and general consumers such as casual creators, students, and individual users. These users typically don’t need a full, high-end creative suite like Adobe Photoshop or Adobe Premiere Pro, but prefer easy-to-use, AI-powered, productivity-focused tools. This expands Adobe’s Total Addressable Market beyond traditional creative professionals.
Adobe is highlighting two tiers of AI-powered products, including existing tools powered by AI, such as Photoshop AI capabilities and the Acrobat AI Assistant. The other layer is AI-first products built from the ground up around AI workflows such as automation, generation, and co-pilot. These two layers allow Adobe to increase user productivity, simplify complex creative tasks, and increase adoption among non-expert users. With creativity at its core, the company invests in new products while expanding innovation across all its core applications. These new products include Adobe Acrobat, Adobe Express, and Acrobat Studio, which integrates AI agents, which is expected to help Adobe expand its footprint among students as well as business and creative professionals.
Acrobat Studio turns PDFs into conversational knowledge hubs that users can explore and get insights, answers, and recommendations with the help of a customizable AI assistant. You can create content from the information you collect using Adobe Express authoring tools and templates and image and video generation tools powered by Firefly.
The company has experienced steady growth across its Acrobat and Express product families. Growth in total monthly active users accelerated by 17% year-over-year, reaching over 850 million monthly active users at the end of Q1 2026.
Adobe expects business professional and consumer subscription revenue to be between $1.8 billion and $1.82 billion in the second quarter of fiscal 2026. The company expects subscription revenue for creative and marketing professionals to be between $4.41 billion and $4.44 billion.
Adobe faces tough competition in segment areas and AI
ADBE’s AI business is microsoftMSFT and alphabetGoogle.
Microsoft’s intelligent cloud revenue benefits from growth in Azure AI services and increased AI Copilot business. The company monetizes AI through existing customer relationships, reducing customer acquisition costs while increasing revenue per user. Microsoft’s $625 billion remaining performance obligation (RPO) and 15 million Microsoft 365 Copilot paid seats demonstrate strong enterprise demand and successful AI product adoption.
In comparison, Adobe’s RPO reached $22.22 billion at the end of the first quarter of fiscal 2026.
Alphabet’s focus on leveraging AI to drive growth is a key driver. There’s a lot of AI built into the company’s services, including search and Google Cloud. Alphabet is leveraging AI to improve its search advantage with the release of Gemini 2.5. Search revenue is driven by increased engagement with features like AI Overview, which now has 2 billion monthly users and is available in 200 countries and over 40 languages.
ADBE Stock Price Performance, Valuation and Estimates
Adobe stock has declined 30.5% since the beginning of the year, lagging the broader Zacks Computer & Technology sector’s decline of 5%.
Adobe Stock performance
Image source: Zacks Investment Research
ADBE stock is trading at a premium, as suggested by its Value Score of B.
On a per-book basis, Adobe stock trades at a discount of 8.49x compared to the broader sector’s 9.36x.
ADBE evaluation
Image source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 second-quarter earnings is set at $5.82 per share, an increase of 15 cents over the past 30 days, suggesting year-over-year growth of 15%.
Adobe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally appeared on Zacks Investment Research (zacks.com).
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