Adobe’s $25 Billion Vote of Confidence Meets a Market That Isn’t Buying It

Adobe's record revenue and $25B buyback fail to lift stock, down 60% from peak, as AI monetization doubts and CEO departure rattle investors.

Adobe has thrown its financial weight behind a message of strength, but the market is still not listening. The software giant’s board authorised a $25 billion share buyback programme on 21 April — its second such commitment in two years — yet the stock continues to slide, down roughly 28% since the start of 2026 and a staggering 60% from its January 2024 peak. Trading at around €203 to €206, the shares sit barely 7% above their 52-week low.

Record Revenue, Record Skepticism

The disconnect between Adobe’s operational performance and its share price has rarely been wider. The company posted record revenue of $6.4 billion in its fiscal first quarter, while full-year 2025 sales climbed to $23.7 billion from $21.5 billion in 2024. Net profit jumped from $5.5 billion to $7.1 billion over the same period. A new $25 billion buyback, representing nearly a quarter of Adobe’s $104 billion market capitalisation, would normally be a powerful bullish signal.

Instead, the stock fell 7.6% on the day of the quarterly release. The culprit: Digital Media net new annualised recurring revenue (ARR) came in at $400 million, well short of the $450 million to $460 million analysts had pencilled in. That miss, combined with deepening anxiety about artificial intelligence, has overwhelmed any positive news.

The AI Paradox

Adobe’s generative AI service Firefly is gaining traction — usage rose more than 45% quarter on quarter, and Firefly-related ARR has now topped $250 million. The company’s overall AI-attributable recurring revenue more than tripled year on year. But investors remain unconvinced that this growth will translate into higher subscription revenue for Adobe’s core Creative Cloud products.

The fear is structural: powerful new AI tools could erode demand for Adobe’s traditional creative software altogether. Management has already acknowledged a notable decline in the legacy image-licensing business. Until Firefly demonstrably closes the monetisation gap, the market is likely to stay sceptical.

Leadership Vacancy Adds Uncertainty

Compounding the strategic challenge is a change at the top. Shantanu Narayen, Adobe’s CEO for 18 years, has announced his departure and will move into the role of board chairman. Frank Calderoni is leading the search for a successor, with both internal and external candidates under consideration. A new chief executive will have to prove they can navigate the AI transition — a task that has unnerved investors already wary of disruption.

The valuation reflects the mood. Adobe’s forward price-to-earnings ratio has collapsed to around 10, down from above 21 just 14 months ago. Analysts have responded in kind: TD Securities cut its price target to $310, while UBS lowered its to $260.

A June Reckoning

All eyes are now on 11 June, when Adobe reports its fiscal second-quarter results. The key metric will once again be Digital Media net new ARR. A figure above $450 million would signal that Firefly is beginning to generate meaningful incremental subscription revenue. Anything less would reinforce the narrative that Adobe’s buyback is a financial cushion rather than a catalyst for growth.

For now, the stock remains caught between record fundamentals and deep-seated doubt. The next quarterly print — along with the appointment of a new CEO — will determine whether Adobe can finally break the spell.