Adobe’s AI Alliance With NVIDIA and WPP Faces a June Reckoning

Adobe posts record Q1 revenue of $6.4B and unveils AI-driven CX platform with NVIDIA and WPP, yet stock falls 28% amid analyst downgrades and commoditization fears.

The software giant Adobe is caught in a paradox. Its first-quarter results were stellar, a new partnership with NVIDIA and WPP promises to reshape enterprise marketing, and yet the stock has shed roughly 28% of its value since the start of the year. Investors are asking a pointed question: can AI-driven growth close the gap between operational strength and market skepticism?

On the Las Vegas stage at the Adobe Summit, the company unveiled an expanded collaboration with chipmaker NVIDIA and advertising holding company WPP. The centerpiece is the Adobe CX Enterprise Coworker, a platform designed to orchestrate marketing workflows from content generation to personalized campaign activation. NVIDIA contributes its accelerated-computing stack, including Nemotron models and the new OpenShell runtime, which runs AI agents in a rule-based, isolated environment. For regulated industries, this compliance-friendly architecture is a key selling point.

The partnership extends beyond the trio. Adobe has built an ecosystem that includes AWS, Anthropic, Google Cloud, IBM, Microsoft, and OpenAI. Agencies such as Omnicom, Publicis, and Havas are standardizing on the CX Enterprise platform, while system integrators like Accenture, Deloitte Digital, and PwC develop industry-specific solutions on top of it.

Adobe Firefly Foundry, accelerated by NVIDIA infrastructure, allows brands to train custom models on proprietary assets, producing commercially safe content at scale. A new 3D digital-twin solution, built on NVIDIA Omniverse and OpenUSD, gives AI agents persistent product identities to draw from when creating content. NVIDIA CEO Jensen Huang declared at the Summit that the new agent system would improve work for 99.9% of creatives worldwide.

The operational numbers back some of that optimism. In the first quarter of fiscal 2026, Adobe posted record revenue of $6.4 billion, up 12% year over year. Operating cash flow hit a record $2.96 billion. Gross margin stands at a healthy 89%. For the current quarter, management guided for revenue between $6.43 billion and $6.48 billion.

Yet the stock trades at roughly €208, nearly 45% below its 52-week high. The relative strength index sits at 20, a technically oversold level. Mizuho analyst Gregg Moskowitz downgraded the stock on Monday, cutting his price target from $315 to $270 and removing his buy rating. He cited growing competition from AI, particularly among home users and small businesses, and warned that organic revenue growth would likely top out in the high single digits for the foreseeable future. Moskowitz admitted he had delayed the downgrade too long, held back by the stock’s cheap valuation.

The analyst community is split: 20 buy ratings, 28 holds, and 3 sells. The average Wall Street price target stands at $321, according to FactSet. RBC Capital is more bullish with a $350 target. Critics point to two structural risks: AI could commoditize creative software, and the departure of the long-serving CEO introduces leadership uncertainty at a critical juncture.

The real test arrives on June 11, when Adobe reports second-quarter results. The focus will be on Digital Media net new annual recurring revenue. In the first quarter, that figure came in at $400 million, well below the consensus estimate of $450 million to $460 million. A jump above $450 million would signal that the new AI tools are finally driving growth. A miss would reinforce the skeptics’ view that Adobe’s AI strategy has yet to translate into tangible momentum.