Adobe reported a significant boost in its Digital Media segment for fiscal 2025, with revenues reaching $17.65 billion, marking an 11% year-over-year increase. This segment accounted for 74% of the company’s total revenues, while annualized recurring revenue (ARR) totaled $19.20 billion, also up 11.5% year over year. Adobe anticipates an ARR growth target of 10.2% for fiscal 2026, propelled by the adoption of its AI-integrated tools such as Firefly and Acrobat AI Assistant.
Despite these gains, Adobe’s stock has underperformed, dropping 32.6% over the past year compared to a 19% increase in the broader Zacks Computer and Technology sector. The consensus estimate for the first-quarter fiscal 2026 earnings is $5.88 per share, reflecting a 15.8% increase from the previous year.
In a competitive landscape, Adobe faces challenges from major players like Microsoft and Alphabet, who are excelling in the AI sector. Microsoft’s strengths in AI Copilot services and AzureAI are accompanied by substantial investments in OpenAI, while Alphabet leverages AI across its Google Cloud offerings, highlighting the increasing rivalry in the tech space.
