Adobe Inc (NASDAQ:ADBE) is set to report fourth-quarter results on Wednesday, with analysts expecting modest growth and little investor enthusiasm as the software giant navigates concerns over AI disruption.
Analysts at Jefferies expect Adobe to report a small beat in Q4, consistent with historical trends, and to provide guidance for fiscal 2026 that signals steady but decelerating growth.
Revenue for the quarter is forecasted at around $6.11 billion, slightly above the guidance range of $6.08 billion to $6.13 billion, while earnings per share are expected near $5.40, at the top end of the guided $5.35–$5.40 range.
Operating margins are projected to compress slightly to 45.5%, reflecting ongoing investments in the company’s Firefly AI platform and other initiatives.
Adobe is also expected to report a seasonal increase in its Digital Media annual recurring revenue (ARR), with Jefferies projecting $563 million, up from $500 million in Q3. Price increases introduced earlier this year and stable macroeconomic conditions could support the slight upside.
The company is shifting to provide total company ARR guidance for fiscal 2026, with Jefferies anticipating roughly 10% growth, modestly down from an estimated 11% in fiscal 2025. Revenue is expected to increase 9.3% to $25.9 billion, with operating margins remaining flat at 46.2%. Jefferies views this guidance as conservative but reasonable, given slowing growth trends in both Digital Media and Digital Experience subscriptions.
Adobe shares are down 22% year-to-date, sharply underperforming the S&P 500 and Nasdaq. Investor interest remains low as concerns over AI disruption in the application software space persist.
Jefferies notes that the stock trades at around 14 times enterprise value to free cash flow, near a five-year trough, providing a potentially favorable risk/reward for long-term investors willing to wait for an AI-driven catalyst.