Adobe down 44%: the stock is pricing a problem, while the business is still growing

A 44% drop usually signals that investors have stopped trusting the next chapter. With Adobe, the debate is not about whether the company can sell software today. It is about whether generative AI protects Adobe’s pricing power and growth, or whether it makes it easier for cheaper, simpler tools to pull users away. The stock is reacting to that uncertainty more than to the current income statement.

What complicates the bearish view is that the underlying business still looks strong. In fiscal 2025 Adobe delivered record revenue of $23.77 billion, with high profitability and cash generation. The company’s FY2026 outlook calls for revenue of $25.9–$26.1 billion and further EPS growth. That is why the setup is polarized: a weak stock on one side, and a company that still guides to growth on the other.

Top points of analysis

• Adobe grew revenue 11% to $23.77 billion in 2025 and enters FY2026 with total ARR (annual recurring revenue) of $25.20 billion, implying further growth.

• The outlook for…