Adobe shares have fallen roughly 57% over the past year following the launch of Anthropic’s Claude-powered AI agent, Cowork, which demonstrated a new level of autonomy and practical utility. Investors are questioning whether traditional software firms can compete with next-generation, agentic AI offerings, and Adobe’s long-standing creative suite is perceived as vulnerable. While internal tests suggest that AI will augment rather than replace human creativity, the rapidly accelerating pace of innovation has created a sentiment-driven sell-off rather than one based on deteriorating core demand. The company’s flagship Firefly AI tool is due to report initial subscriber and usage metrics in the coming quarter, which will be closely watched as a barometer of Adobe’s ability to retain its data advantage and fend off AI-native challengers.

Despite the recent slump, Adobe trades at approximately 17.7 times trailing earnings, well below its historical high-growth multiples north of 30 times. In the most recent quarter, Adobe reported revenue growth of 10.5% year-over-year to 6.19 billion in its digital media segment, while earnings per share of 5.50 exceeded consensus estimates by 0.10. Management issued guidance for first-quarter EPS between 5.85 and 5.90 and full-year EPS of 23.30 to 23.50, reflecting an expectation of continued double-digit annual recurring revenue expansion. This combination of depressed multiple and persistent top-line momentum positions Adobe as an attractive value play for investors willing to tolerate near-term margin pressures from ongoing AI R&D investment.

A recent MarketBeat survey of 28 brokerages yielded a consensus rating of Hold: four analysts recommend Sell, twelve Hold, eleven Buy and one Strong Buy. The average one-year price target stands near 403. Multiple major firms have trimmed their targets in recent months, citing uncertainty around AI-driven growth inflection. Meanwhile, institutional investors have maintained sizeable stakes: Norges Bank initiated a new position valued at over two billion, and several asset managers including Arrowstreet Capital and Dodge & Cox increased their holdings by double-digit percentages last quarter. Insider activity has been minimal, with less than 0.2% of shares owned by company executives, suggesting that management remains confident in the firm’s long-term roadmap.