Adobe Earnings Preview: Software Scare Behind Us?
Adobe Earnings Preview: Software Scare Behind Us?
By:Mike Butler
Key Points for Adobe Ahead of Earnings
- Adobe stock is down 22% in 2026
- Last quarter, Adobe announced a 7.2 million share buyback, and record operating cashflows of over $10 billion
- Adobe is set to report quarterly earnings on March 12th after the market closes
- Earnings-per-share (EPS) is expected to come in at $5.86 on $6.27 billion in revenue
- Updates & forecasts on AI driven tools will be a focal point for this earnings call
AI Integration or AI Replacement – Key Driver in Software Stock Prices
In the beginning of 2026, software stocks were tanking with the fear that software business models would be replaced by AI agents sooner than later. We saw products like Adobe (ADBE) and Microsoft (MSFT) take big hits as the term “SaaSpocalypse” was tossed around liberally. Just a few weeks later, we saw a sharp rebound in these same stocks, as the narrative shifted from AI replacement to AI integration – did we really think a tech giant like Microsoft was going away? Whatever you believe, these narratives have resulted in price discounts for many tech stocks – Adobe included.
Just two years ago, ADBE stock reached a recent high of $638.25. Much has changed since then, with the rapid adoption of AI and how it is changing the landscape of technology as we know it every single day. Now, ADBE stock is trading around $270 per share, down 22% in 2026 so far.
Steep discounts are here for the taking – that is if you believe Adobe is one of the software companies that will survive the AI storm. Recently, we did see a handful of household name software stocks find a bottom in recent price action and rally from the lows. AI Integration vs AI replacement has been a big key to that reversal in price action, and now we have the opportunity to see what ADBE can do amid the AI volatility we have seen in 2026 so far.
In the previous earnings call, Shantanu Narayen, chair and CEO of Adobe, had a positive sentiment for the future:
“Adobe’s record FY2025 results reflect our growing importance in the global AI ecosystem and the rapid adoption of our AI-driven tools...By advancing our innovative generative and agentic platforms and expanding our customer base, we are excited to target double-digit ARR growth in FY2026.”
Dan Durn, EVP & CFO of Adobe, echoed the sentiment:
“Adobe delivered another outstanding year, fueled by strong global demand for our AI solutions across Business Professionals & Consumers and Creative & Marketing Professionals customer groups...Looking ahead to FY2026, we are confident in our ability to deliver industry-leading innovations, double-digit ARR growth and world class profitability.”
While many traders & investors are fearful of the software sector, the numbers do not lie – Adobe delivered record operating cashflows of over $10 billion (about $31 per person in the US) in FY2025 and bought back 7.2 million shares. Share buybacks can be a tossup – some see it as a bullish confidence stance, while others see it as a lack of investment opportunity elsewhere.
Regardless of your bullish, bearish, or neutral stance on Adobe ahead of earnings, it is important that you have an understanding of what the market perception is for the earnings announcement by looking at the implied volatility of the options market.
Implied Volatility for Adobe Earnings
Implied volatility is derived from the options prices, and these prices can tell us a story ahead of quarterly earnings for equities. ADBE stock is currently trading around $270 per share, and the implied volatility for this week reflects an expected stock price range of +-$20.96. That is about 7.7% of the notional value of the stock price, which puts Adobe’s earnings announcement on the higher end of the implied volatility range that we typically see for most equities, as many companies land within 5-10% of the stock price.
Bullish on Adobe Stock for Earnings
If you are bullish on ADBE stock for earnings, you’ll want to see the company beat EPS & revenue estimates, with a strong forecast for the remainder of 2026. The software scare of 2026 was no joke, and the executive team will want to address that to quell the fear of bullish Adobe traders & investors alike.
Bearish on Adobe Stock for Earnings
If you are bearish on ADBE stock for earnings, you will want to see an EPS or revenue miss, and a weak forecast for the rest of 2026. You are leaning more towards AI replacement over AI integration and see a challenging time for Adobe and other software stocks moving forward.
Join us on Options Trading Concepts Live at 11am CST on Thursday, March 12th as we explore options trading strategies ahead of the Adobe earnings announcement!
Mike Butler, tastylive director of market intelligence, has been trading the markets for a decade. He appears on Options Trading Concepts Live, Monday-Friday. @tradermikeyb
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