Adobe shares drop over 4% ahead of Q2 earnings, AI initiatives in focus

Shares of Adobe Inc. dropped more than 4% on Thursday ahead of the company's fiscal second-quarter 2026 earnings announcement, which is scheduled after the closing bell.

The software giant has endured a difficult year, with its stock losing nearly 30% of its value so far in 2026. Investor sentiment has been weighed down by concerns that rapidly evolving generative AI technologies could challenge Adobe's core software business and slow revenue growth. Market participants are closely watching the earnings report for signs of how the company's artificial intelligence initiatives are translating into sales and customer adoption, particularly following a series of new product launches by competitors and recent changes in leadership.

Adobe has also drawn attention to its substantial $25 billion share repurchase programme ahead of the results. However, the buyback announcement has done little to reverse the broader weakness in the stock, which continues to face persistent selling pressure.

At 1:36 p.m. EDT, Adobe shares were trading at $224.03 on the New York market, down 4.04%, or $9.42, from the previous close.

From a technical perspective, the stock remains firmly in bearish territory. Adobe is trading significantly below its key moving averages, including the 20-day average of $248.49, the 50-day average of $246.08 and the 200-day average of $299.80. The gap below these levels suggests sustained weakness across short-, medium- and long-term timeframes.

With the stock trading well below major technical indicators and lacking meaningful support from moving averages near current levels, investors remain cautious as they await the company's earnings update and outlook.

According to Anton Kharitonov, expert at Traders Union, “Adobe continues its downtrend under pronounced selling pressure. He sees the pattern of falling below all major moving averages as a technical concern. Kharitonov notes that renewed fears about AI disruption and weak buying signals fuel persistent bearish momentum. In his view, the lack of clear support, coupled with deteriorating sentiment and failing technicals, heightens risk for further declines.”

“Until we see evidence of meaningful demand returning, I view any attempt at a rebound as likely to fail,” said Kharitonov.

Adobe eyes two internal leaders for CEO role

Adobe is evaluating both internal and external contenders as it searches for a successor to long-serving Chief Executive Officer Shantanu Narayen, with a particular focus on leaders capable of steering the company through the rapidly evolving artificial intelligence landscape.

According to a Bloomberg report, David Wadhwani and Anil Chakravarthy, who lead Adobe's two largest business divisions, have emerged as the frontrunners from within the company to take over the top role.

Alongside its internal succession planning, the software giant has enlisted executive search firm Heidrick & Struggles International Inc. to identify outside candidates. The company is reportedly seeking executives with proven expertise in building, scaling or commercialising AI-driven products, reflecting the growing importance of artificial intelligence to Adobe's future strategy.

As part of the process, Adobe held discussions with Microsoft Corp. Executive Vice President Charles Lamanna regarding the CEO position. However, Bloomberg reported that Lamanna eventually chose not to pursue the opportunity further.

The leadership search comes after Narayen announced in March that he intends to step down as CEO once a suitable successor has been appointed. Narayen, who has guided Adobe for nearly 20 years and overseen its transformation into a global software powerhouse, will continue to serve as chairman of the board following the transition.