Adobe (ADBE) Stock: Is the 50% Drop a Buying Opportunity?

TLDR

• Adobe boosted advertising spending to $1.4 billion in 2025, a 30% year-over-year increase
• Shares have plunged over 50% since early 2024, recently touching their lowest level since 2019
• The company is promoting AI tools like Firefly to combat threats from Canva and other competitors
• Wall Street analysts maintain a “Hold” rating with an average price target of $391.81
• Adobe discontinued Adobe Animate, triggering backlash from creator communities

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Adobe is fighting back against competitive pressure with its wallet. The software giant spent $1.4 billion on advertising in 2025, marking a 30% increase from 2024.

Adobe Inc., ADBE

That spending level puts Adobe ahead of tech peers like Salesforce and Meta on a revenue percentage basis. The company is even outspending consumer-focused names like Uber and Netflix.

The aggressive marketing push signals a shift in strategy. Adobe is leaning into brand awareness campaigns as simpler design tools chip away at its dominance.

Shares have taken a beating. The stock has dropped more than 50% since early 2024 and recently hit its lowest close since 2019. On Wednesday, ADBE touched $271.02 during intraday trading.

AI Features Take Center Stage

Much of Adobe’s advertising focuses on artificial intelligence capabilities. TV spots showcase how Acrobat uses AI to generate reports and marketing materials. YouTube campaigns feature videos created entirely with Adobe’s AI tools.

The company is pushing Adobe Express and Firefly as all-in-one creative solutions. Ads appear on billboards, Lyft bikes, and at major industry events like Cannes and Sundance.

Adobe brought in Lara Balazs as chief marketing officer to lead the charge. She previously ran marketing at Intuit, a company known for spending heavily on consumer advertising. Intuit allocates roughly 11% of revenue to ads, similar to Coca-Cola and Procter & Gamble.

The company claims Firefly AI tools have been used tens of billions of times. But investors remain skeptical about whether usage translates to sustainable revenue growth.

Mixed Signals From Wall Street

Recent news flow has been choppy. Semrush shareholders approved a merger with Adobe that should expand marketing and analytics capabilities. The company is also offering unlimited Firefly generations through March 16 to drive adoption.

However, Adobe announced it will shut down Adobe Animate on March 1. The decision sparked criticism from users and could lead to customer losses in specific creator segments.

Multiple analysts recently lowered price targets. UBS, Baird, and BMO all trimmed forecasts, with BMO downgrading the stock to Market Perform. The consensus rating now sits at “Hold” with an average target of $391.81.

One analyst rates the stock a Strong Buy while ten assign Buy ratings. Eleven analysts rate it a Hold and five recommend selling.

Adobe beat earnings expectations in its latest quarter, posting $5.50 per share versus the $5.40 consensus. Revenue of $6.19 billion topped forecasts of $6.11 billion.

Management set Q1 FY2026 earnings guidance at $5.85 to $5.90 per share. Full-year guidance ranges from $23.30 to $23.50.

The company faces rising costs as it defends market position. Operating expenses have climbed faster than gross profit in recent years, squeezing margins.

Competition from AI tools and simplified design platforms shows no signs of slowing. Apple’s new creator tools bundle adds another potential threat, though analysts say it doesn’t match Adobe’s capabilities yet.

Institutional investors own nearly 82% of shares. Several funds adjusted positions in the fourth quarter as the stock struggled.

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