Adobe Gets Post-Earnings Lift: Long-Term Outlook Favors Upside

Core Insights - Adobe's stock has experienced a significant decline in 2025, down 21% year-to-date and 45% from its all-time high of $635 in February 2024 [2][3] - The company's Q4 FY2025 results showed revenue of $6.19 billion, a 10% growth, and adjusted EPS of $5.50, which slightly exceeded expectations [4][5] - Despite the positive earnings report, concerns about competition from AI tools and emerging competitors like Figma are impacting investor sentiment [6][7] Financial Performance - Adobe's Q4 FY2025 revenue was $6.19 billion, surpassing sales estimates of $6.11 billion, with a growth rate of 10% [4] - Adjusted EPS increased by 14% to $5.50, beating estimates of $5.40 [4] - Annualized recurring revenue (ARR) ended FY2025 at $25.66 billion, an increase of 11.5%, with expectations of over 10% growth in FY2026 [5] Market Outlook - Adobe's current stock price reflects low growth expectations, which could present long-term upside if the company outperforms these expectations [3] - The rise in stock price following the earnings report indicates a potential market correction, although competition and AI disruption remain significant concerns [3][6] - The belief that AI tools will limit Adobe's long-term growth is prevalent among investors, particularly with competitors growing rapidly [6][7]