Adobe's revenue guidance disappoints investors, causing a 13% drop in stock price.

• Adobe's stock price dropped after the company's revenue forecast fell below analysts' predictions.
• Adobe anticipates revenue for the fiscal first quarter to be between $5.63 billion and $5.68 billion, which falls short of the analysts' expectation of $5.73 billion.
• Results for the fiscal fourth quarter came in ahead of estimates.

On Thursday, shares plummeted 13%, approaching their sharpest decline since March, following the software vendor's dismal revenue forecast.

Adobe reported that sales in the fiscal first quarter will be between $5.63 billion and $5.68 billion, according to its fourth-quarter earnings report. This is lower than the analysts' average expectation of $5.73 billion, as per LSEG.

TD Cowen analysts downgraded the stock from buy to hold, while Wells Fargo maintained its buy rating. Despite this, the stock has fallen 20% for the year, lagging behind the Nasdaq, which has risen 33% and hit the 20,000 mark on Wednesday.

Despite Adobe's forecast falling short of estimates, the company's fourth-quarter results surpassed expectations.

LSEG reported adjusted earnings per share of $4.81, exceeding the average analyst estimate of $4.66, and revenue in the fourth quarter increased by 11% to $5.61 billion, surpassing the average estimate of $5.54 billion.

Adobe's growth strategy has centered on monetizing generative artificial intelligence, particularly in standalone offerings such as Firefly image generation and additional Creative Cloud offerings.

Deutsche Bank analysts kept their buy rating but reduced their target price from $650 to $600.

"Although the results and guidance for the next year may require some faith, the analysts noted that Adobe is one of the few application software companies in their coverage that is successfully monetizing generative AI today."

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