VALUATION HIGHLIGHTS
- Digital Media constitutes 80% of the Trefis price estimate for Adobe's stock.
- Digital Experience constitutes 18% of the Trefis price estimate for Adobe's stock.
WHAT HAS CHANGED?
ADBE Stock vs. S&P500 Performance
The changes in ADBE stock over the recent years have been far from consistent. Returns for the stock were 13% in 2021, -41% in 2022, 77% in 2023, and -25% in 2024.
In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, 24% in 2023, and 23% in 2024 — indicating that ADBE underperformed the S&P in 2021, 2022 and 2024.
Latest Earnings
Adobe reported Q1 FY 2025 results with revenue at $5.7 billion, up 10% y-o-y. Diluted earnings per share were $5.08 on a non-GAAP basis, compared to $4.48 in the same period of the previous year.
Note: Adobe's FY'24 ended on November 29, 2025.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
- Digital Media Revenues: Adobe's Digital Media (DM) segment—which includes revenue from Creative Cloud (CC) and Document Cloud—has demonstrated robust growth. Sales increased from $9.2 billion in 2020 to $15.9 billion in 2024, an average annual growth rate of 14.6%. Looking ahead, we forecast DM sales to grow at an average annual rate of 12%, reaching over $34 billion by 2031.
Notably, Adobe's AI offerings could significantly influence this trajectory: if DM sales accelerate to a 15% annual growth rate, our price estimate for Adobe could see a 20% upside; conversely, if sales slow to around 7% annually due to underwhelming AI performance, it could result in a 20% downside to our price estimate.
For additional details, select a driver above or select a division from the interactive Trefis split for Adobe at the top of the page.
BUSINESS SUMMARY
While widely recognized for its free Acrobat PDF Reader, Adobe's primary revenue stream comes from providing software solutions to "creative professionals." These tools are essential for tasks such as image manipulation, animation, web design, and the creation of interactive media. Renowned Adobe products like Photoshop, Dreamweaver, Flash, and InDesign are staples for graphic designers, production artists, web designers, photographers, animators, publishers, and writers.
KEY TRENDS
- Digital Economy's Ongoing Expansion:
- The increasing digital transformation across work, communication, and entertainment sectors continues to boost demand for Adobe's innovative creative and document management solutions.
- Creator Ecosystem Flourishing:
- The explosive growth of content creation across digital platforms has intensified the need for comprehensive Creative Cloud applications that support design, video production, photography, and multimedia content development.
- Enterprise Digital Transformation Momentum:
- Organizations worldwide are prioritizing strategic digital initiatives, which is driving widespread adoption of Adobe's Digital Experience solutions that enable sophisticated marketing, advanced analytics, and enhanced customer experience management.
- Artificial Intelligence's Transformative Impact:
- Cutting-edge AI developments are fundamentally reshaping digital media and marketing landscapes. Adobe is strategically positioning itself by proactively integrating generative AI technologies like Firefly into its product ecosystem, signaling a forward-looking approach to technological innovation.
- Personalization as a Business Imperative:
- With customers expecting increasingly tailored interactions, businesses are investing heavily in data-driven personalization strategies. This trend is propelling demand for Adobe's robust analytics and experience management tools that enable precise, context-aware customer engagement.
