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Adobe (ADBE) shares have decreased by 36.3% over the past year, significantly underperforming the Zacks Computer and Technology sector, which saw a return of 23.9%, and the Zacks Computer – Software industry, appreciating by 9.5%. This decline is attributed to stiff competition from major players in the AI and generative AI sectors, including Microsoft, Alphabet, and Salesforce.
For fiscal 2025, Adobe anticipates revenue between $23.65 billion and $23.7 billion, up from $21.51 billion in fiscal 2024, with expected non-GAAP earnings ranging from $20.80 to $20.85 per share, compared to $18.42 per share in fiscal 2024. The company’s annual recurring revenue (ARR) from new AI-first products is projected to exceed $250 million.
Adobe’s AI-driven products have gained traction, with a 25% year-over-year increase in monthly active users for Acrobat and Express. However, Adobe’s current valuation appears stretched, trading at a price/book ratio of 11.31X, compared to industry averages.
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