Adobe's AI-driven earnings beat is not enough to boost the stock

By Britney Nguyen The software company said its record fiscal 2025 results reflect global attention and use of its AI tools Adobe's stock was up fractionally after its fiscal fourth quarter earnings report on Wednesday. Adobe (ADBE) and its traditional software peers have spent much of the year battling the perception that they're not moving fast enough to compete in the artificial intelligence space as hype builds over the technology. The company's earnings report on Wednesday was seemingly not enough to lift bleak sentiment. Adobe's shares were up fractionally in the extended session on Wednesday after it reported fiscal fourth quarter earnings results. Adobe's shares are down more than 22% on the year. The software company slightly beat Wall Street's expectations for its fiscal fourth quarter, reporting record revenue of $6.19 billion - up 10% from the previous year, and ahead of the $6.11 billion analysts were looking for, according to the FactSet consensus. Adjusted earnings per share came in at $5.50, which topped the consensus for $5.40. For the full fiscal year 2025, Adobe said it saw record revenue of $23.77 billion, representing 11% growth from the previous year. Analysts had been expecting $23.69 billion, according to FactSet. See more: Can Adobe's 'incredibly frustrating stock' turn around after earnings? Wall Street is doubtful. Adobe's record results for fiscal 2025 "reflect our growing importance in the global AI ecosystem and the rapid adoption of our AI-driven tools," CEO Shantanu Narayen said in a statement. Narayen said the company is targeting double-digit annual recurring revenue growth in fiscal 2026 from improving on its "innovative generative and agentic platforms" and growing its customer base. Total ARR from fiscal 2025 was $25.2 billion, which the company said represents 11.5% annual growth. Ahead of the report, Baird analyst Rob Oliver said guidance of about 10% growth in total ARR "would be viewed as reasonable" by investors. Adobe chief financial officer Dan Durn said the company's fiscal 2025 results were driven by "strong global demand" for its AI offerings in its "Business Professionals & Consumers and Creative & Marketing Professionals" segments. For fiscal year 2026, Adobe is eyeing total revenue of between $25.9 billion and $26.1 billion, which is ahead of the FactSet consensus for $25.9 billion. Don't miss: Intel, Adobe and these other 'AI loser' stocks could get left behind in the next phase of the tech boom Baird's Oliver said earlier this week that Wall Street will want to see more progress from Adobe in monetizing its AI offerings going into the next fiscal year. Despite the beat, the earnings report may not have offered investors enough of that momentum. He said investors will be watching for signs that AI's suite of AI-powered tools are leading to both higher adoption and usage by customers, as well as incremental revenue. Successfully monetizing its suite of creative generative AI models called Firefly could be one way for Adobe to change investors' minds that the company is losing out to AI companies with similar products, Oliver said. -Britney Nguyen This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 12-10-25 1724ET