Will CEO change and AI competition change the investment story for Adobe (ADBE), which has been focused on AI so far?

• In recent weeks, Adobe reported fiscal 2026 first-quarter results showing 12% revenue growth and non-GAAP operating margin improvement, while also announcing plans to retire longtime CEO Shantanu Narayan amid continued investment in generative AI across the company’s product suite.
• At the same time, several Wall Street firms downgraded Adobe, citing increased competition in Creative Cloud and questions about its pricing power and AI execution, even as hedge funds increased their positions and AI-related recurring revenue expanded.
• Here we explore how these leadership changes and competitive concerns may reshape Adobe’s investment story, which has traditionally focused on AI.

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Adobe investment narrative summary

To own Adobe today, you need to believe that its AI-powered creative and document ecosystem will remain essential even as low-cost and free alternatives proliferate. While the most important near-term catalyst is continued adoption of Firefly, Acrobat AI, and AI Credits within Creative Cloud, the biggest risk is increased competition that erodes pricing power. The recent cancellation of earnings and CEO changes add to the uncertainty, but do not fundamentally change the core argument.

The announcement that annual AI-related recurring revenue tripled and Adobe’s AI tools reached nearly 850 million monthly active users is particularly relevant here. This underpins the current push to monetize AI, even as the Wall Street downgrade highlights questions about whether these products can offset cheaper competitors and keep enterprise customers engaged over time.

But despite Adobe’s AI momentum, investors should be aware that there may be competition from lower-cost creative tools and new AI-native platforms.

Read the full story on Adobe (it’s free!)

The Adobe story projects revenue of $31.2 billion and revenue of $9.1 billion by 2029. This would require an 8.4% annual revenue increase, or an increase in revenue of approximately $1.9 billion from the current $7.2 billion.

We reveal how Adobe’s projections yield a fair value of $328.19, 35% higher than the current price.

explore other perspectives

Some of the most optimistic analysts expected Adobe’s revenue to reach around US$31.2 billion and profits of US$11.4 billion by 2028, so this AI-competitive news could further diverge from those optimistic expectations and more cautious views.

Check out 87 other fair value estimates at Adobe – Why the stock could be worth 9% less than its current price!

decide for yourself

Don’t agree with the existing narrative? Following the herd rarely yields exceptional investment returns. Follow your intuition.

• A great starting point for our research is an analysis that reveals four key benefits that can influence your investment decision.
• Our free Adobe research report provides comprehensive fundamental analysis compiled into a single visual (snowflake), making it easy to assess Adobe’s overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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