On September 10, 2026, Adobe Inc. (NASDAQ:ADBE) reported third-quarter fiscal 2026 results for the period ended August 28, 2026, with revenue rising 13% to $6.76 billion, above the $6.70 billion analysts expected. Non-GAAP earnings per share came in at $6.13 versus a $6.09 estimate.
Adobe Inc. shares fell 1.9% in extended trading after Adobe guided fourth-quarter revenue to $6.80 billion to $6.85 billion, a midpoint slightly below the $6.85 billion consensus.
The quarter also arrived alongside a leadership transition, with incoming CEO Anil Chakravarthy set to take over as Shantanu Narayen moves to executive chair on December 1.
Bull Case
RBC Capital sees sentiment across the broader SaaS landscape slowly improving, and views Adobe’s quarter as largely in line with no major surprises; freemium monthly active users grew more than 70% year-over-year and AI-first ARR jumped more than 150% to over $650 million, enough to keep the firm at Outperform with a $315 price target.
JPMorgan called the quarter robust, beating expectations modestly, and despite trimming its target to $315 from $340, stayed Overweight, arguing the shares are inexpensive with a low bar for upside as monetization recovers.
At Wells Fargo, the expectation is for net new ARR to improve in the fourth quarter on enterprise seasonality and recent product announcements, prompting a target increase to $270 from $250 while maintaining an Overweight rating.
BMO Capital described the results as roughly in line with expectations and raised its target to $270 from $230 while keeping a Market Perform rating. However, BMO flagged a roughly 38% year-over-year decline in net new ARR and expects organic revenue growth to slow further in fiscal 2027.
Adobe Inc. crossed one billion monthly active users in the quarter, up more than 20% year-over-year.
Bear Case
Morgan Stanley’s Adam Wood is not convinced Adobe’s rising user base has yet translated into faster ARR growth, and holds an Underweight rating and a $240 price target. Net new ARR fell 38% year-over-year, and Wood estimates Adobe needs close to $775 million in net new ARR in the fourth quarter, nearly double the third-quarter figure, just to narrow that decline to about 16%. He also pointed to remaining performance obligations growth slowing to 8% from 13% in the second quarter.
KeyBanc’s Jackson Ader stays Underweight as well, arguing Adobe’s AI momentum has not yet shown up in ARR growth. Organic net-new ARR slipped to $390 million from $560 million in the prior quarter and $640 million a year earlier, with total bookings down 1.3%. Ader says a strong fourth quarter will be required for investors to assume a multiyear rebound in ARR growth is ahead.
Citi’s Tyler Radke calls the report muted, cutting the firm’s target to $250 from $301 and keeping a Neutral rating as ARR growth continues to decelerate, which the firm expects to leave the stock range bound.
What The Smart Money Sees
Arrowstreet Capital held the largest Adobe stake among hedge funds, 6.79 million shares worth $1.39 billion as of the second quarter of 2026. AQR Capital Management, the second-largest holder, trimmed its stake 8% to $805 million. Citadel Investment Group boosted its position 249% to $178 million, while Harris Associates and GLG Partners raised their stakes 24% and 23%, respectively.
Overall hedge fund ownership fell to 81 funds from 86 between the first and second quarters of 2026. Short interest stood at 17.37 million shares as of August 31, 2026, down from 19.35 million a month earlier, equal to 4.89% of float.
Adobe Inc. shares trade at 9.22 times forward earnings, well below Salesforce’s 14.86 and ServiceNow’s 26.11.
Takeaway
Adobe’s user growth story is intact, with AI-first ARR up more than 150% and monthly active users past the billion mark, but the bears keep pointing to the same gap: none of that reach is showing up in net new ARR, which fell 38% year-over-year. Both sides agree the fourth quarter is the test, since Adobe Inc. needs a sharp rebound in bookings just to keep its FY27 growth algorithm credible heading into the CEO transition.
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