The shares of software company Adobe has fallen by more than 8% on Friday after the Photoshop maker said it is expecting a weaker fourth quarter compared to analysts’ expectations.
Adobe reported $5.41 billion in revenue for the third quarter, beating the $5.37 billion estimated by analysts and marking an 11% increase compared to the same period in 2024. Its earnings per share (EPS) came at $4.65 versus $4.54 expected.
On the other hand, Adobe is projecting to have between $5.50 billion and $5.55 billion in sales and earnings per share between $4.63 and $4.68 for Q3, while the analysts expected revenue of $5.61 billion and $4.67 in EPS.
Investors likely took the weak Q4 guidance as a sign that the company’s investments in artificial intelligence, especially AI image and video-generating tools, will take longer to pay off. However, some analysts believe that things are not as bad as they seem.
“While investors are likely concerned about guidance’s effect on upcoming DM FY25 guidance and hesitant about where we are in the maturity of the business, we believe this reaction is overblown,” Goldman Sachs analysts wrote in a note sent to clients.
Adobe’s stock dropped by 8.47% on Friday to close at $536.87 per share. The company’s shares are now 7.45% down year-to-date and 15.42% down from 2024’s high of 634.76 per share from February.