Adobe reported third-quarter fiscal 2026 earnings Wednesday, posting revenue of $6.76 billion, up 13% year over year, and non-GAAP earnings per share of $6.13, beating the roughly $6.69 billion and $6.09 per share analysts had forecast heading into the report. GAAP earnings per share came in at $4.62, and the company posted a record $2.52 billion in operating cash flow. Both revenue and EPS came in above the high end of the guidance range Adobe had issued ahead of the quarter.
The report arrived at a tense moment for Adobe stock, which has fallen in 10 of its last 12 earnings reactions and closed at $255.65 on Wednesday, well below its 52-week high of $370.86. Wall Street’s core question going into the results was whether Adobe’s Creative Cloud and Document Cloud subscription businesses can keep growing as free and low-cost AI-native tools chip away at its user base.
Why are analysts split on the stock?
Of 38 analysts tracked ahead of the report, seven rated Adobe a strong buy, two a moderate buy, 23 a hold, two a moderate sell and four a strong sell, reflecting a broadly neutral consensus rating. Bulls point to Adobe’s full-year guidance, which calls for revenue around $26.55 billion and adjusted earnings per share around $24.40, both above analyst consensus estimates heading into the quarter. Skeptics cite the company’s shift toward free-tier offerings, an ongoing leadership transition and rising spending on AI infrastructure as reasons growth could slow even if the current quarter beats expectations.
Adobe has leaned heavily on its Firefly generative AI tools and AI features built into Photoshop, Premiere Pro and Acrobat to argue that its subscription model can absorb the AI shift rather than be disrupted by it. The company has also folded AI credits and usage-based features into existing Creative Cloud plans, a strategy it says increases engagement among existing subscribers even as it faces competition from standalone AI image and video generation startups that undercut Adobe’s pricing.
Beyond the AI competition question, investors have also been watching Adobe’s leadership transition, which has added uncertainty to the stock heading into the print of Wednesday’s results. Adobe’s annualized recurring revenue reached $27.50 billion by quarter’s end, though the company still has not broken out specific subscriber or churn figures, leaving those numbers as one of the more closely watched gaps in an otherwise better-than-expected report.
Wednesday’s broader market backdrop complicated the stock’s reaction to the beat, with all three major U.S. stock indexes closing lower amid rising bond yields and inflation concerns tied to global oil markets, a mood that traders said made it harder for even better-than-expected numbers to move the stock higher.
Sources: Benzinga · Alphastreet
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