Adobe’s Agentic AI Push and Ecosystem Expansion Test Investor Patience

Adobe unveils agentic AI framework for advertising automation, but shares drop 28% YTD as investors question monetization and competitive moats.

Adobe is shifting its artificial intelligence strategy from content generation to full-fledged automation, hoping to convince marketers that AI can manage entire campaign workflows rather than just produce images or text. The software giant unveiled a new framework on May 13 titled “A Framework for Practical AI in Advertising,” which carves AI capabilities into predictive, generative and agentic categories — with the heaviest emphasis on the last. Agentic systems, as Greg Collison, product chief of Adobe Advertising, describes them, can independently initiate, coordinate and complete tasks such as setting up campaigns, automating routines and orchestrating processes across teams and platforms. That operational bottleneck is precisely where large marketing departments feel the most strain.

The move comes less than a week after Adobe’s Semrush unit announced a partnership with Lovable, a platform specializing in so-called “vibe coding” where AI handles most development work. Under the deal, announced on May 14, Semrush feeds its search intelligence data — including billions of backlinks and hundreds of millions of domain profiles — into Lovable’s environment, enabling developers building AI-native apps and websites to embed search optimization at the creation stage. Pavel Fabrikantov, Semrush’s Senior Vice President of Product, noted that organic traffic remains critical for businesses even as large language models reshape web search. The collaboration deepens Adobe’s ecosystem, which also saw the launch of an AI productivity agent for Acrobat earlier in May that lets users edit PDFs and create content through conversational commands.

Despite these efforts to expand its AI footprint, the market remains deeply skeptical. Adobe’s shares trade at around €203.70 (roughly $218), a decline of nearly 28% since the start of the year and about 43% over the past twelve months. The stock sits almost 46% below its 52-week high of €374. The distance from its 200-day moving average of €264.85 underscores how far sentiment has soured, and Friday’s modest 0.97% uptick did little to change the broader picture. The valuation has become notably compressed: the forward price-to-earnings multiple stands at about 10.47, compared with a sector average of 16.8, indicating that the market is pricing in not only AI disruption risk but also doubts about how quickly Adobe can monetize its new tools.

Financially, the company continues to show steady growth. Revenue in the fiscal first quarter rose 12% to $6.40 billion, while annualized recurring revenue from AI offerings more than tripled. For the full year, Adobe expects 9% revenue growth, 10% ARR expansion, and non-GAAP earnings per share in a range of $23.30 to $23.50. The operating numbers suggest underlying demand has not collapsed, but investors worry that generative AI is eroding the competitive moats that once made Adobe’s creative and marketing software indispensable.

Management has deployed a massive capital return program to support the stock. The board authorized a $25 billion share buyback that runs through April 2030, which can help stabilize earnings per share but does not by itself rebuild confidence in the growth narrative. Analysts on Wall Street remain cautious but see upside: the 31 analysts covering the stock assign a consensus “Hold” rating with an average price target of roughly $338, implying significant potential from current levels. They cite the diversified portfolio, ARR momentum and expanding partner ecosystem as positives, while flagging the risk that competitors investing aggressively in generative AI may capture market share.

The next major test comes with Adobe’s second-quarter earnings report, when the market will scrutinise whether the agentic AI framework, the CX Enterprise platform and partnerships like the one with Lovable are translating into measurable user adoption and revenue. If Adobe can provide clarity on how these pieces fit together operationally, the new strategy may finally gain the credible financial foundation it currently lacks.