Adobe Inc. (NASDAQ: ADBE) saw its stock price tumble on Friday, June 13, 2025, dropping nearly 6% in early trading, with shares last trading at $389.79, down $23.89 or 5.78% from the previous close of $413.68.
The sharp decline comes as investors express growing concerns over the timeline for significant returns from the company’s integration of artificial intelligence (AI) into its software tools, overshadowing an upward revision in its full-year revenue forecast .
The San Jose-based software giant, known for flagship products like Photoshop and Premiere Pro, reported its Q2 fiscal 2025 results, surpassing analyst expectations with earnings of $5.06 per share and revenue of $5.9 billion. Despite this, the stock faced a muted reaction, with a 1% dip in after-hours trading following the earnings release, signaling investor unease about the pace of AI-driven monetization.
Adobe also raised its full-year 2025 revenue guidance to a range of $23.50 billion to $23.60 billion, up from the prior estimate of $23.30 billion to $23.55 billion, and projected adjusted earnings per share between $20.50 and $20.70, compared to the earlier forecast of $20.20 to $20.40 .
Analysts pointed to competitive pressures and a longer-than-expected timeline for AI initiatives as key factors weighing on sentiment. Angelo Zino of CFRA Research noted increasing worries about “competitive challenges and an extended timeline to achieve significant monetization from AI.”
Adobe’s generative AI tool, Firefly, which allows users to create and edit content using text prompts, has been bolstered by integrations with models from OpenAI and Google, but RBC analysts cautioned that validating these initiatives and addressing competition in the generative AI space will take time .
Market reactions were further reflected in analyst adjustments, with at least five brokerages lowering their price targets for Adobe stock post-earnings. Despite the sell-off, some remain optimistic about long-term potential, with BMO Capital maintaining an “Outperform” rating and a $450.00 price target, while Morgan Stanley upheld an “overweight” rating with a $510.00 target, citing attractive valuation and generative AI prospects.
The consensus among 41 brokerage firms suggests an “Outperform” rating with an average target price of $497.26, implying a 29.26% upside from current levels .
Year-to-date, Adobe’s stock has declined by approximately 13%, underperforming broader market indices. With a current forward P/E ratio of 18.88 compared to competitor Autodesk’s 29.16, and trading at 20 times expected earnings against a historical average of 25, the stock appears undervalued to some, though risks of slower AI-driven growth loom large . Today’s slide underscores the market’s impatience for tangible returns on Adobe’s AI ambitions amid a fiercely competitive tech landscape.
