Will Adobe (ADBE) Stock Rebound as Q2 Earnings Near?

Core Viewpoint - Adobe is facing challenges due to concerns about AI disruption affecting its creative software suite, leading to a significant decline in stock price and slower sales growth [2][3]. Group 1: Stock Performance - Adobe stock is down nearly 30% from its 52-week high of $587, making it a potential buy-the-dip candidate [1]. - The stock is down 5% in 2025 and has only increased by 12% over the last three years, underperforming compared to broader indexes and the Zacks Computer-Software Industry, which has gained nearly 100% [4]. Group 2: Financial Expectations - For Q2, Adobe's sales are expected to rise by 9% to $5.79 billion compared to $5.31 billion in the same quarter last year, while EPS is projected to increase by 11% to $4.96 from $4.48 [5]. - Adobe has consistently surpassed Zacks EPS Consensus for 25 consecutive quarters, with an average earnings surprise of 2.53% in the last four quarters [6]. Group 3: Valuation Metrics - Adobe trades at a forward P/E of 20.4X, which is below the S&P 500's 23.2X and offers a 41% discount to its Zacks industry average [8]. - The stock is trading at a significant discount compared to its decade-long median of 42.7X forward earnings and well below its peak of 65.4X during this period [9]. Group 4: Future Outlook - Adobe holds a Zacks Rank 3 (Hold) ahead of its Q2 report, with long-term shareholders potentially rewarded if the company can meet or exceed quarterly expectations and provide favorable guidance to alleviate AI disruption concerns [10].