Adobe's Creative and Marketing Growth Surges: More Upside Ahead?

Adobe ADBE is benefiting from the growth of its Creative and Marketing Professionals segment, driven by AI adoption, core subscription strength and enterprise platform expansion. Creative and Marketing Professional revenues increased 12% year over year (11% in constant currency) to $4.39 billion in the first-quarter of fiscal 2026. 

The first-quarter fiscal 2026 growth drivers for Creative and Marketing Professionals included growth in Creative Cloud. This was driven by the Creative Cloud Pro offering, higher subscription penetration among professionals and teams, and increased usage across design, video and photo workflows. This reflects customers upgrading to more “all-in-one,” AI-enabled creative subscriptions. 

Adobe expanded the number of new users entering its ecosystem dramatically in the reported quarter. Creative freemium MAUs crossed 80 million, growing more than 50% year over year, and include web and mobile versions of Firefly, Express, Premiere Pro, Photoshop and Lightroom. At the heart of Adobe’s evolving creative universe lies Firefly. With generative credit consumption surging 45% quarter over quarter, creators are no longer merely experimenting with AI. They are embracing it as an essential companion in their artistic journey, crafting images, refining visuals and shaping stories with effortless precision. This bodes well for Adobe’s Creative and Marketing top-line growth. Adobe expects Creative and Marketing Professionals subscription revenues between $4.41 billion and $4.44 billion for the second quarter of fiscal 2026. 

Adobe is witnessing strong high-margin growth in its enterprise digital experience business, driven by robust demand for its marketing cloud solutions. Key platforms such as GenStudio and Adobe Experience Platform delivered impressive performance, with each growing more than 30% year over year in ARR in the first quarter of fiscal 2026.

These solutions enable enterprises to run highly personalized marketing campaigns, effectively manage and unify customer data, and automate content creation using AI, making them critical tools for modern digital engagement. At the same time, Adobe is building future growth drivers through its expanding AI innovation pipeline. New offerings such as LLM Optimizer, Sites Optimizer and Brand Concierge are gaining strong traction and are expected to further strengthen Adobe’s position in AI-driven marketing automation.

Adobe Faces Tough Competition

ADBE’s AI business is minuscule compared with Microsoft MSFT and Alphabet GOOGL.  

Microsoft’s Intelligent Cloud revenues are benefiting from growth in Azure AI services and a rise in the AI Copilot business. The company monetizes AI through existing customer relationships, reducing customer acquisition costs while expanding revenue per user. Microsoft’s $625 billion remaining performance obligations (RPO) and 15 million Microsoft 365 Copilot paid seats demonstrate robust enterprise demand and successful AI product adoption.
 
In contrast, Adobe’s RPO hit $22.22 billion at the end of the first quarter of fiscal 2026.

Alphabet’s focus on leveraging AI to drive growth is a key catalyst. AI is heavily infused across its offerings, including Search and Google Cloud. The company is leveraging AI to boost search dominance with the launch of Gemini 2.5. Search revenues are driven by improving engagement with features like AI Overview, which now has 2 billion users per month and is available in more than 40 languages across 200 countries.

ADBE’s Share Price Performance, Valuation & Estimates

Adobe shares have dropped 31.4% year to date, underperforming the broader Zacks Computer and Technology sector’s growth of 0.3%.

                                                   Adobe Stock’s Performance

Image Source: Zacks Investment Research

The ADBE stock is trading at a discount, as suggested by a Value Score of B.

In terms of trailing price/book, Adobe shares are trading at a discount of 8.49X compared with the broader sector’s 9.86X.

                                                             ADBE Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings is pegged at $5.83 per share, unchanged over the past 30 days, suggesting 15.22% year-over-year growth. 
 

                                               Adobe Inc. Price and Consensus

Adobe Inc. price-consensus-chart | Adobe Inc. Quote

Adobe currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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