No matter what Adobe (NASDAQ: ADBE) does, it seemingly isn’t good enough for investors. The stock slid yet again after posting another nice quarter, cutting its shares in half over the past year.
Let’s take a closer look at the software-as-a-service (SaaS) company’s results and prospects to see what could help get the stock moving in the right direction.
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A model of consistency
While there is a pervasive narrative that Adobe will be an artificial intelligence (AI) loser, the company has been a model of consistency that continues to deliver low-double-digit revenue growth quarter in and quarter out. This continued in the second quarter of fiscal year 2026, ended May 29, with revenue rising 13%, or 11% in constant currencies, to $6.62 billion. This was well above its previous forecast for revenue of between $6.43 billion and $6.48 billion.
Annual recurring revenue (ARR), meanwhile, climbed 12.5% to $27.1 billion, and adjusted earnings per share (EPS) jumped 18% year over year to $5.96, ahead of Adobe’s prior $5.80 to $5.85 outlook.
Turning to individual segments, the creative and marketing professionals customer group saw revenue grow by 13% to $4.54 billion. Revenue from the business professionals and consumers group climbed by 16% to $1.85 billion.
Adobe also upped its full-year guidance. It now expects adjusted EPS of $24.35 to $24.45 on revenue of $26.5 billion to $26.6 billion. That’s up from an earlier outlook for adjusted EPS of $23.30 to $23.50 on revenue of $25.9 billion to $26.1 billion.
While the results and guidance were solid, investors didn’t like that Adobe planned to lean into a freemium model to bring in more customers, which it said would have some short-term ARR impact. The company also announced that its CFO would depart, which follows an earlier announcement that its CEO was stepping down.
Is it time to buy Adobe stock?
In the near term, the answer to that question appears to be no. The company continues to deliver solid, consistent results and generates huge free cash flow. However, despite trading at a forward P/E of just 8.5 times, the stock continually gets pushed down.
Given its growth and valuation, I think the stock looks interesting long-term, but right now there is no catalyst in sight to get the stock moving in the right direction. The company needs to shake the narrative that it will be an AI loser, and apparently, delivering consistent, solid revenue growth isn’t the answer. As such, investors who own the stock are going to need to be extremely patient at this point.
