Adobe Beats Q2 Amid Strong AI Momentum, But Stocks Drops 5%

Adobe (NASDAQ:ADBE) has turned in a stronger-than-expected performance for its fiscal second quarter, prompting the software powerhouse to lift its full-year financial projections. Riding the continued surge in demand for AI-driven creative tools, the company’s core digital media division delivered robust gains.

Despite this solid showing, investor enthusiasm was muted. Adobe's stock dropped more than 5% intra-day today, as some analysts suggested the revised outlook, while positive, didn’t quite match the upbeat momentum seen from other tech peers like Oracle earlier in the week.

Looking ahead to the remainder of its fiscal year, Adobe now anticipates adjusted earnings per share to range from $20.50 to $20.70, with revenue expected to land between $23.50 billion and $23.60 billion. This marks a modest bump from its earlier forecast, which placed EPS at $20.20 to $20.50 and revenue between $23.30 billion and $23.55 billion.

The company’s digital media arm, a key growth engine, is also expected to contribute more than previously projected. New estimates put segment revenue between $17.45 billion and $17.50 billion, edging up from the earlier range of $17.25 billion to $17.40 billion.

As for the upcoming third quarter, Adobe expects adjusted earnings per share to fall between $5.15 and $5.20, with revenue reaching up to $5.925 billion. Both figures surpass current Wall Street expectations, which hovered at $5.11 for earnings and $5.88 billion in revenue.

In the second quarter, Adobe posted $5.87 billion in revenue, beating analyst predictions of $5.8 billion and reaffirming its steady trajectory amid the ongoing AI boom.