Neither Adobe’s strong Q2 2025 performance nor its improved full-year forecast has managed to halt the decline in its share price. If investor pressure intensifies, ADBE could fall as low as 200 USD.
Adobe delivered solid results for Q2 of its 2025 financial year, reporting record revenue of 5.87 billion USD (up 11% year-on-year) and adjusted earnings per share (EPS) of 5.06 USD (up 13%) – both exceeding analysts’ expectations. The company has raised its full-year outlook, now projecting revenue of 23.5-23.6 billion USD and EPS in the range of 20.50-20.70 USD. This upgrade is underpinned by continued strength in the Digital Media and Digital Experience segments. Adobe also highlighted sustained momentum in AI-driven innovation – particularly across Firefly, Acrobat AI, and GenStudio – which is contributing to increased product adoption and annual recurring revenue.
Despite a strong quarter and an upward revision to its guidance, Adobe shares fell by around 5%, as investors remain cautious over the pace of AI monetisation and intensifying competition from Canva, OpenAI, and Alphabet (NASDAQ: GOOG). Overall, while the financial results and AI progress were well received, investors expressed concern over the limited number of short-term catalysts and the extended timeline required for significant AI-driven revenue.
This article reviews Adobe Inc., outlines the company’s revenue sources, summarises its Q2 2025 financial performance and presents expectations for the remainder of the 2025 financial year. It also includes a technical analysis of ADBE shares and offers Adobe’s price outlook for the 2025 calendar year.
About Adobe Inc.
Adobe was founded in December 1982 by John Warnock and Charles Geschke. The company specialises in software for businesses and individual users through the Adobe Acrobat, Illustrator, Photoshop, and Premiere Pro applications. It also provides digital marketing and document management solutions through the Creative Cloud and Experience Cloud platforms. The company went public on 20 August 1986, listing its shares on the NASDAQ under the ticker symbol ABDE.
Image of the company name Adobe Inc.
Adobe Inc.’s main revenue streams
Adobe’s revenue comes from the following sources:
- Digital Media: products and solutions that help create, edit, and distribute digital content. This segment enables users to work with graphics, video, animation, web design, and other digital media. It forms the core of Adobe’s business
- Digital Experience: business solutions that improve client interaction through digital channels. This includes Adobe Experience Cloud, which offers analytics, marketing campaign management, content personalisation, and client experience optimisation tools. It helps businesses analyse data, automate marketing processes, and create a seamless user experience across websites, apps, and other platforms
Since the Q1 of fiscal year 2025, Adobe has begun providing information on subscription revenue by creating two groups:
- Business Professionals and Consumers Group: this group includes revenues from Acrobat, Adobe Express, and Document Cloud subscriptions.
- Creative and Marketing Professionals Group: includes revenues from Digital Experience subscriptions and all other Creative Cloud subscriptions.
Adobe Inc. Q1 FY 2025 report
On 12 March, Adobe Inc. released its Q1 fiscal 2025 report for the period ending on 28 February 2025. Below are its highlights:
- Revenue: 5.71 billion USD (+10%)
- Net income: 2.22 billion USD (+8%)
- Earnings per share: 5.08 USD (+13%)
- Operating income: 2.71 billion USD (+10%)
Revenue by segment:
- Digital Media: 4.23 billion USD (+11%)
- Digital Experience: 1.41 billion USD (+10%)
- Business Professionals and Consumers Group: 1.53 billion USD (+15%)
- Creative and Marketing Professionals Group: 3.92 billion USD (+10%)
Commenting on its record Q1 FY 2025 revenue, Adobe’s management emphasised the significant role of AI-based innovation. CEO Shantanu Narayen stated that Adobe’s AI achievements drive creative economic growth. In particular, he noted that AI-focused products (Acrobat AI Assistant, Firefly App, and GenStudio) generated over 125.00 million USD in revenue, which is expected to double by the end of the fiscal year 2025.
As part of its Q2 fiscal 2025 financial targets, Adobe expects total revenue to be between 5.77 and 5.82 billion USD and EPS between 4.95 and 5.00 USD. The company also anticipates an operating margin of approximately 45%. In the Digital Media segment, Adobe expects revenue of 4.27-4.30 billion USD. Overall, these forecasts align with analysts’ expectations. However, following their release, the company’s stock fell by over 14% as investors voiced concerns about the pace of monetising Adobe’s AI initiatives.
Adobe Inc. Q2 FY 2025 report
- Revenue: 5.87 billion USD (+10%)
- Net income: 2.17 billion USD (+8%)
- Earnings per share (EPS): 5.06 USD (+13%)
- Operating profit: 2.67 billion USD (+10%)
Revenue by segment:
- Digital Media: 4.35 billion USD (+11%)
- Digital Experience: 1.46 billion USD (+10%)
- Business Professionals and Consumers Group: 1.60 billion USD (+15%)
- Creative and Marketing Professionals Group: 4.02 billion USD (+10%)
Adobe reported a strong performance in Q2 fiscal 2025, with revenue reaching 5.87 billion USD, up 11% year-on-year. Growth was primarily driven by sustained demand for Creative Cloud products and steady performance in the Digital Experience segment.
Artificial intelligence remains a key growth driver, with Firefly (image and video generation), Acrobat AI Assistant, Adobe Express and GenStudio contributing to increased user engagement. Adobe announced that it expects to generate more than 250 million USD in annual revenue from AI products by year-end, highlighting that AI is no longer just a trend but a commercially viable tool.
Management raised its full-year 2025 guidance, now forecasting revenue of 23.50-23.60 billion USD and EPS of 20.50-20.70 USD, both above previous estimates. For Q3 FY2025, Adobe projects non-GAAP EPS of 5.15-5.20 USD and revenue of 5.87-5.92 billion USD, also ahead of analysts’ consensus forecasts. The operating margin is expected to be around 45.5%.
The company’s cash flows remain strong, with an operating cash flow of 2.19 billion USD and 3.5 billion USD allocated to share buybacks. A further 10.9 billion USD remains in repurchase reserves, supporting shareholder value.
However, shares remain under pressure as investors become cautious over the intensifying competition in AI-based solutions from players such as Canva, OpenAI, and Alphabet Inc. The market is also awaiting firm evidence that AI integration will lead to sustained margin expansion rather than remain a buzzword.
Adobe is beginning to demonstrate that AI is not just a strategic initiative but an already operational commercial engine. The improved outlook for the next quarter reflects management’s confidence in the resilience of this trend. If Adobe continues to integrate AI into its products, raise prices effectively and convert users to paid subscriptions, FY2025 could mark a turning point, laying the groundwork for a revaluation of its shares. The coming quarters will determine the solidity of this new growth trajectory.
Expert forecasts for Adobe Inc.’s stock
- Barchart: 21 out of 33 analysts rated Adobe stock as a Strong Buy, two as a Moderate Buy, nine as a Hold, and one as a Moderate Sell. The highest target price is 600 USD, while the lowest is 380 USD
- MarketBeat: 17 out of 26 analysts assigned a Buy rating to the shares, while nine gave a Hold recommendation. The highest target price is 645 USD
- TipRanks: 19 out of 27 respondents gave a Buy rating to the stock, and eight recommended it as a Hold. The highest target price is 660 USD
- Stock Analysis: out of 22 experts, four rated the shares as a Strong Buy, 12 as a Buy, and six as a Hold. The highest price target is 600 USD
Expert forecasts for Adobe Inc. stock for 2025
Adobe Inc. stock price forecast for 2025
On a weekly timeframe, Adobe stock is trading within a descending channel. The stronger-than-expected report failed to support ADBE shares, with the price edging lower. However, the upbeat outlook for fiscal 2025 could reverse the current trend. Based on the current Adobe stock performance, potential price movements in 2025 are as follows:
The optimistic forecast for Adobe stock suggests a breakout above the 450 USD resistance level, driving the ADBE stock price higher towards the trendline near 550 USD. A breakout above this level would open the door for an upward move to the next resistance level at 635 USD.
The alternative forecast for Adobe shares predicts continued decline and a potential breakout below the 335 USD support level. This scenario increases the risk of a sharp price drop to the channel’s lower boundary at 200 USD, from which a new growth wave could emerge.
Adobe Inc. stock analysis and forecast for 2025
Risks of investing in Adobe Inc. stock
Investing in Adobe stock involves several risks that may negatively impact the company’s profitability, revenue, and investor returns:
- Macroeconomic factors: Adobe’s performance is influenced by the broader global economy. Economic downturns and geopolitical events may adversely affect the company’s financial position
- Competitive environment: the emergence of new competitors, including affordable AI models from startups such as DeepSeek, threatens Adobe’s market share. Intensified competition may exert pricing pressure and reduce profitability
- Market volatility: Adobe’s financial performance is subject to market fluctuations and other macroeconomic factors. Investors should consider portfolio diversification to mitigate the risks associated with investing in the company’s shares