WS Investor
12 Jun 2026, 20:54
Adobe Slides as Wave of Analyst Target Cuts Overshadows Strong Earnings
Adobe shares fell 6.8% despite reporting record quarterly revenue, raising its full-year outlook, and highlighting strong growth in its artificial intelligence business, as Wall Street analysts lowered their price targets following the earnings release.
Several major firms, including Mizuho, Baird, Piper Sandler, UBS, BMO Capital Markets, and Citigroup, reduced their targets on the stock, while JPMorgan cut its target from $420 to $340 despite maintaining an Overweight rating. Most analysts kept their existing ratings, suggesting confidence in Adobe's business but a more cautious view on valuation.
The company reported fiscal second-quarter revenue of $6.62 billion, up 13% year over year, while AI-first annual recurring revenue exceeded $500 million after more than tripling from a year earlier. Adobe also raised its fiscal 2026 revenue and earnings guidance, citing strong demand for its AI-powered products.
However, the analyst revisions indicate investors were expecting even stronger signs that Adobe can convert growing AI adoption into faster revenue growth. The target cuts suggest Wall Street believes the company's long-term fundamentals remain solid but that expectations for future growth and valuation have become more measured.
The stock's decline highlights the increasingly high bar facing large-cap software companies, where strong earnings and higher guidance are no longer enough if investors believe AI-driven growth could take longer to fully materialize.
Adobe shares fell 6.8% despite reporting record quarterly revenue, raising its full-year outlook, and highlighting strong growth in its artificial intelligence business, as Wall Street analysts lowered their price targets following the earnings release.
Several major firms, including Mizuho, Baird, Piper Sandler, UBS, BMO Capital Markets, and Citigroup, reduced their targets on the stock, while JPMorgan cut its target from $420 to $340 despite maintaining an Overweight rating. Most analysts kept their existing ratings, suggesting confidence in Adobe's business but a more cautious view on valuation.
The company reported fiscal second-quarter revenue of $6.62 billion, up 13% year over year, while AI-first annual recurring revenue exceeded $500 million after more than tripling from a year earlier. Adobe also raised its fiscal 2026 revenue and earnings guidance, citing strong demand for its AI-powered products.
However, the analyst revisions indicate investors were expecting even stronger signs that Adobe can convert growing AI adoption into faster revenue growth. The target cuts suggest Wall Street believes the company's long-term fundamentals remain solid but that expectations for future growth and valuation have become more measured.
The stock's decline highlights the increasingly high bar facing large-cap software companies, where strong earnings and higher guidance are no longer enough if investors believe AI-driven growth could take longer to fully materialize.