Adobe stock has gone from being a Wall Street favorite to one of the worst performers. The share price has fallen sharply to around $309. This is its lowest level since November 2022. It is also about 55% below its 2021 peak.
The fall has wiped out massive value. Adobe’s market worth has dropped from more than $340bn to about $129bn. That decline has shaken investor confidence.
Many analysts are now openly bearish on the stock. Oppenheimer recently downgraded Adobe from outperform to market perform. The firm warned that newer and more powerful AI tools could disrupt Adobe’s core products.
Goldman Sachs already has a sell rating on the stock. Its price target stands at $290. BMO and Jefferies have also downgraded Adobe in recent weeks.
Because of this, analyst expectations have dropped sharply. Around a year ago, the average price target was near $575. Today, it has fallen to about $406.
A major concern is the fast pace of AI innovation. Investors fear that advanced AI tools could reduce demand for some of Adobe’s software over time. There is also skepticism about Adobe’s own AI products, with many believing they are still not strong enough.
Competition has also increased. Companies like Figma and Canva have taken market share. Canva, based in Australia, has become a major force in design. Its private market valuation has risen to more than $42bn.
Adobe is also no longer seen as a fast growing tech giant. Growth has slowed. In its latest results, revenue rose 10% to a record $6.19bn in the fourth quarter of FY25. While still solid, this pace is much lower than in the past.
The company ended the quarter with $22.5bn in remaining performance obligations. Analysts expect this figure to keep rising, which shows demand is still there.
Despite all the concerns, some investors see value in the stock now. Adobe looks cheap by many measures. Its forward price to earnings ratio is 13.9. That is far below its five year average of 30 and lower than the sector average of 25.
The forward PEG ratio stands at 1.07. This is also below the sector median of 1.71. These numbers suggest the stock may be undervalued.
Adobe also scores well on the Rule of 40. Revenue growth is around 10%. EBITDA margins are close to 30%. Net income margins are near 40%. This balance between growth and profitability is seen as healthy.
Analysts still expect Adobe to grow. Revenue is forecast to reach $26bn and then $28.35bn over the next two years. That would mean growth of about 9% year on year.
Earnings per share are also expected to rise. EPS is forecast to move from $20.95 in 2025 to $23.45 this year. It could reach $26.3 in the following financial year.
From a technical view, the stock has been in a clear downtrend. It recently hit $309, the lowest point since late 2022.
The chart shows a large falling wedge pattern. This is a setup that often signals a possible reversal. The two trend lines are now close to meeting.
Because of this, some believe the stock could rebound over time. If that happens, $350 will be an important level to watch. On the downside, a further drop could send the stock toward $272, which was a key low in September 2022.
