ADBE Stock Rises Ahead Of Q2 Earnings Report Today – Michael Burry Thinks The Market May Be Underpricing Adobe

Wall Street remains divided on the ADBE’s near-term outlook, with the majority of the analysts rating the stock ‘Hold.’

• Analysts and investors will be looking for signs that Adobe’s AI features are boosting design software sales amid expectations of a steady report.
• Citi analysts said there is a risk that Adobe might adjust its full-year expectations.
• Stocktwits sentiment for ADBE was ‘bullish’ on Thursday.

Adobe shares gained 0.4% in premarket trading on Thursday, ahead of the company’s quarterly report.

Analysts and investors would be looking for clues on how the company’s AI features are boosting sales of its design software amid expectations of a stable report. The report comes as Adobe scouts for a new chief executive after Shantanu Narayen announced his departure in March.

Adobe has been one of the key casualties of the growing belief that AI could erode demand for some traditional software offerings. ADBE stock has declined 10% already this month, taking the year-to-date drop to 33%.

To be sure, Adobe has expanded its AI capabilities over the last few years with the introduction of the AI model Adobe Firefly, which powers features across apps like Photoshop and Illustrator.

Ahead of the results, noted investor Michael Burry said he believes there is a high likelihood for the company and the stock to bounce back. 

“Adobe with new management will have a treasure trove of assets that can be used to train anything Adobe wants to train better than anyone else,” Burry said in a comment on his Substack page. “Even if this is partially true, the market is underpricing the stock by quite a bit. Price matters.”

ADBE’s Q2 Expectations

Analysts expect second-quarter revenue to rise nearly 10% to $6.45 billion, according to estimates from Koyfin, which would be the slowest pace of growth in three years. Adjusted profit is expected to rise 15% to $5.81 per share.

Still, Wall Street remains divided on the stock’s near-term outlook. Stifel trimmed its target to $350 from $400 and kept a ‘Buy’ rating, while TD Cowen cut its target to $285 from $310 and maintained ‘Hold’.

Citi, which lowered its target on ADBE to $264 from $253, flagged risk to the company's fiscal 2026 outlook, saying its freemium and AI monetization won't be enough to offset the lack of pricing benefits in the back half of the year.

In all, 20 of 38 analysts recommend ‘Hold,’ 15 rate it ‘Buy’ or higher, and three rate it ‘Sell’ or lower, according to Koyfin. Their average price target of $329.33 implies a 41% upside from the stock’s close on Wednesday.

Retail View On ADBE 

On Stocktwits, the retail sentiment for ADBE climbed a few points higher in the ‘bullish’ territory, amid ‘high’ message volume. Traders speculated about the post-earnings share price move; over the past quarter, the stock has reacted negatively despite upbeat earnings.

“ADBE mentally preparing for another beat followed by a 5% drop when they don't say "AI" enough in earnings call,” said a trader. Another wrote: “$ADBE earnings will be solid as always…will jump and then sell off back to s*** city. Nothing new here.”

Adobe will issue its earnings report after the market closes.

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