Adobe Beats the Street—But Can It Outsmart the AI Upstarts?

Adobe’s latest earnings call came with all the right headlines: beats on revenue, solid guidance, and a confident tone. But if Wall Street was impressed, the after-hours market reaction didn’t quite scream celebration. That raises a key question—can the king of creative software hold its crown in the age of AI-native challengers?

Solid Numbers, Clouded Confidence

On Thursday, Adobe reported its fiscal Q2 earnings post-market, forecasting $5.88 to $5.93 billion in Q3 revenue—a range that’s above analysts’ consensus of $5.88 billion. Non-GAAP earnings per share were guided between $5.15 and $5.20, again topping the average estimate of $5.11. In any other context, this would be cause for unambiguous applause.

But shares remained largely flat in after-hours trading, hinting at investor skepticism.

AI-Powered… or AI-Outpaced?

Adobe has been rolling out AI capabilities across its Creative Cloud suite—Photoshop, Illustrator, Premiere Pro, and beyond. The vision? A unified toolbox supercharged by generative AI models. And to Adobe’s credit, the tools have become more intuitive, powerful, and accessible.

Yet the landscape has changed. Newcomers like OpenAI’s Sora and Runway are building products with AI as the starting point, not an enhancement. That means faster iteration, cheaper tools, and in some cases, frictionless creativity. For digital creators, Adobe’s once-invincible moat is now being stormed by leaner, AI-first battalions.

The Market Is Watching—and Waiting

Investors aren’t doubting Adobe’s strength. They’re questioning its AI velocity. Can Adobe stay ahead while integrating models into a decades-old codebase and user interface paradigm? Or will the tide shift to players who were born in the transformer era?

As always, execution is everything. The next few quarters will reveal whether Adobe is simply reacting to AI or truly redefining itself around it.