Can Adobe's 'incredibly frustrating stock' turn around after earnings? Wall Street is doubtful.

By Britney Nguyen

Adobe's stock is cheap and the company is better monetizing AI. But analysts think defeating negative investor sentiment could take some time.

Adobe will report fiscal fourth-quarter earnings results on Wednesday.

In a tough year for software stocks, Adobe's been no exception. And even though the company could demonstrate progress in monetizing artificial intelligence when it reports earnings on Wednesday, analysts aren't sure that will be enough to flip bleak investor sentiment.

Simply put, Adobe (ADBE) "has been an incredibly frustrating stock for most of the last 12 months," Mizuho analyst Gregg Moskowitz wrote, and he doesn't see a near-term catalyst. Shares have shed 37% over the past 12 months.

That said, the company seems to have had a "solid" fiscal fourth quarter, he added, citing conversations with enterprise partners and pointing to "decent large-deal activity." Moskowitz noted that Adobe has started "to meaningfully monetize" its generative-AI offerings.

See more: Adobe's earnings beat shows investors that AI is finally paying off, and the stock rises

That could help translate into revenue of $6.1 billion and adjusted earnings of $5.40 per share for the fiscal fourth quarter, according to the FactSet consensus. The company guided for $6.075 billion to $6.125 billion in revenue for the November quarter.

Baird analyst Rob Oliver said investors will be focused on Adobe's fiscal 2026 outlook, and that guidance of about 10% growth in total annual recurring revenue "would be viewed as reasonable."

Like Moskowitz, Oliver said Adobe faces skepticism from investors who worry about the impact AI is having on its business.

Monetization of Adobe's suite of AI-powered features, Firefly, and competition with similar businesses "have been the key topics of discussion with investors," Oliver said in a Tuesday note. Therefore, he thinks improving monetization of Firefly could be one way for Adobe to change the narrative that its business is lagging behind in the race between new AI features and traditional software.

Read: AI is eating software, and Adobe is on the menu. Why the stock could be in trouble.

One quarter may not be enough to shift the conversation, however.

Investors will want to see more progress there going into the next fiscal year, Oliver said. He is watching "for ongoing signs that AI innovations result in higher customer adoption/usage and incremental revenue."

Adobe is trading at 12x estimated free cash flow for 2027, making for a "very attractive" valuation, Mizuho's Moskowitz said, noting that Adobe is seeing double-digit growth and has "strong and stable margins."

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-Britney Nguyen

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12-09-25 1602ET