What Is Adobe No Longer Telling You?

Adobe (ADBE) stock is priced at 12.9 times earnings, compared to a 21.9 multiple for the S&P 500. Yet even at that valuation, investors need to understand exactly what they hold as corporate priorities shift. Just a year ago, executives highlighted how much of the company’s subscription revenue was influenced by AI. They no longer emphasize that measure. So what does Adobe point to now?

Adobe Now Points To A Narrower AI Number

The software maker now spotlights revenue specifically from products sold as AI products, which it brands as AI-first. On the fiscal Q4 2025 call, executives said that total new AI-influenced recurring revenue exceeded one-third of the business, after widening the measure to include the newer AI-first products.

This metric offers a much tighter lens than the previous standard. During the fiscal Q3 2025 call, leadership stated that recurring revenue influenced by AI had passed $5 billion. By the following quarter, executives said their strategy was to drive all recurring revenue through AI-influenced products. That broader measure served to signal that AI was already a component of what many customers were paying for.

Adobe’s AI Products Are Still A Small Business

This AI-first recurring revenue accounted for more than 2% of Adobe’s $27.5 billion in total recurring revenue during fiscal Q3 2026. The former metric painted a vastly larger picture. On the fiscal Q4 2025 call, executives noted the AI-influenced figure exceeded one-third of all recurring revenue, adding that the newer AI-first products were factored into that total.

Even so, these dedicated AI products are expanding at a much sharper clip than the broader business. Executives reported that AI-first recurring revenue grew more than 150% from a year earlier, while total recurring revenue increased 11.2%. For context, during the fiscal Q1 2025 call, leadership said the AI-first lineup had contributed more than $125 million of recurring revenue.

Customer engagement with the tools is also rising. According to executives, AI usage picked up from the prior quarter across both Creative Cloud and the Firefly app.

Should Adobe Shareholders Welcome The Narrower Number?

Yes, with two caveats. The narrower metric counts only AI products that customers actually pay for, and it is growing quickly, so it is the stricter of the two measures. That provides a reassuring signal for those holding the stock.

The risk lies in the scale of those products. They remain a small fraction of the overall business, meaning the bulk of an investment in Adobe is tied to the rest of the subscription base. At the same time, the company is giving more away to acquire users. Monthly users of its free creative products passed 100 million, up more than 70% from a year earlier. Contracted future revenue grew 8% over the same period. When asked in September about posting the first single-digit growth in that metric since early fiscal 2023, executives tied the pace to their focus on signing up free users, noting the figure steps up in the fourth quarter.

Wall Street is not entirely comfortable with the current growth profile. On October 12, Wells Fargo downgraded the stock, citing worsening organic growth, executive instability, and a loss in pricing power.

While the specialized AI products are expanding rapidly, the wider subscription base remains an unsettled variable. When Adobe reports fiscal Q4, the key number to watch is whether total recurring revenue reaches about $28.3 billion. That is management’s target of 10.2% growth on the $25.66 billion it started fiscal 2026 with, against $27.5 billion at the end of the third quarter.

Does This Mean You Should Act On ADBE?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.