Adobe Inc. (NASDAQ:ADBE) said on September 28 that online spending in the United States will grow 6.7% this holiday season, reaching a record of about $275 billion.
The forecast comes from Adobe Analytics and draws on more than a trillion visits to American retail sites. Growth is close to last year’s pace, with discounting doing much of the work.
READ ALSO: Adobe (ADBE): A Billion Users, But Wall Street Wants Proof It Pays
Adobe Analytics Gives It a Position Rivals Cannot Copy:
Adobe Analytics is the measurement layer a large share of American online retailers run their sites through. The forecast exists because Adobe already sees the traffic, and publishing it shows prospective customers exactly how much it sees.
The forecast functions as marketing for Adobe Analytics, and its credibility comes from the scale of the underlying data rather than from the prediction itself.
The business behind it is strong. Adobe turns about a third of its roughly $25.97 billion of revenue into operating profit and produced $9.35 billion of free cash flow over the past twelve months.
Revenue grew 12.9% in the most recent quarter, which is respectable for a company of this size. Subscription software of this kind renews by default, so the revenue arrives without having to be won each year again. That is what makes the market’s current verdict on the stock so unusual for a business of this type.
DON’T MISS: Jim Cramer Says Adobe (ADBE) Could Be a Short-Squeeze Candidate
The Argument Holding Adobe Down is About Seats, Not Earnings:
None of that has protected the shares, which have lost about 30% over twelve months. The market has attached to Adobe the kind of multiple it reserves for businesses in decline. Nothing in the operating numbers explains it. The margin is 34.82%, and revenue is still growing.
The reason is the argument investors are having about generative AI. Adobe sells creative software, and the fear is that tools which produce images and video from a text prompt reduce how much of that software anyone needs to buy. The threat is to the number of seats sold rather than to the price of each one.
Adobe’s answer is that its paying customers buy revision, versioning, and approval workflow rather than single images, and that generative tools do not replace those. Neither side of that argument can be settled by this quarter’s numbers, which is why the debate has lasted as long as it has.
What the numbers cannot show is what happens next, which is precisely the problem. The discount says the market has decided the evidence will arrive eventually. A holiday shopping forecast, however authoritative, does not speak to that.
Conclusion:
The forecast points at an asset most investors overlook, because Adobe sees American online retail in a way competitors cannot replicate. However, that does not help with the argument holding the shares down. The market has priced a question about generative AI that no retail forecast can answer, and nothing in the current results settles it either way. Adobe keeps responding to a question about the future with evidence drawn from the present, which is why the discount has lasted.
What the Price Assumes:
Adobe closed at $239.94 on September 30, about 30% below where it traded a year ago, though the shares have recovered some ground in recent sessions. Revenue grew 12.90% last quarter while earnings grew 3.10%, and that gap is part of why the market stays unconvinced.
The stock trades near 13 times trailing earnings. On the adjusted earnings analysts use, next year’s estimate of $27.67 a share puts it under nine times forward, though that figure is not measured the same way as the trailing one.
Analysts see earnings growing about 13% next year on a company still growing revenue at 12.90%. A single digit forward multiple against that prices decline rather than growth. What a buyer underwrites is that generative AI does not reduce the number of seats Adobe sells.
Market Sentiment:
Adobe Inc. was held by 81 hedge funds with a combined stake value of about $4.1 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 86 hedge fund holders with a cumulative investment value of around $5.7 billion in the previous quarter.
READ NEXT: Reddit (RDDT) vs Snap (SNAP): Which is a Better Stock to Buy? and Microsoft (MSFT) Puts GitHub’s Coding Engine Inside the App Office Workers Already Use
This article is originally published at Insider Monkey.
