Adobe’s (Nasdaq: ADBE) stock had a tough run last year, having dropped 21% as the market remains concerned on AI making it so much easier to do what Adobe helped designers do. Adobe has been addressing the issue by aggressively investing in its AI features and embedding AI capabilities into its offerings. Recently, it also announced the acquisition of Semrush to accelerate its AI initiatives. But the market is not fully convinced about the potential.

Adobe’s Financials

Adobe’s fourth quarter revenues grew 10% to $6.19 billion, ahead of the market’s estimates of $6.11 billion. Adjusted EPS of $5.50 also beat analyst estimates of $5.39.

During the quarter, Digital Media segment revenue grew 11% to $4.62 billion. Digital Experience segment revenue grew 8% to $1.52 billion.

Adobe ended the year with revenues of $23.77 billion compared with $21.51 billion reported a year ago. EPS for the year came grew from $12.36 last year to $16.70.

For the first quarter, Adobe expects revenue of $6.25-$6.30 billion and an EPS of $5.85-$5.90. It expects to end the year with revenues of $25.9-$26.1 billion and an EPS of $23.30-$23.50. The market was looking for revenues of $6.22 billion and an EPS of $5.67 for the quarter and revenues of $25.84 billion with EPS of $23.53 for the year.

Adobe’s Semrush Acquisition

Adobe announced plans to acquire software platform Semrush for an estimated $1.9 billion. Boston-based Semrush is a leading online visibility management SaaS platform known for its AI software that helps companies with search engine optimization, social media, and digital advertising.

Semrush’s tools allow its customers to see trends and derive actionable insights to improve their websites and social media pages. They can distribute relevant content to targeted customers across digital channels. Its premiere solution, Semrush One, merges the traditional keyword-based SEO metrics and analytics view with insight and visibility tracking across AI models from ChatGPT, Google, Perplexity, and Claude. The tool tracks visibility of a brand, and lets customers monitor markets and competitors to identify trends and opportunities faster.

Adobe believes that consumers are increasingly turning to LLMs, such as ChatGPT and Google’s Gemini, for information, recommendations and purchase decisions. Generative AI platforms are becoming a new interface between customers and brands, driving the need for organizations to invest in Generative Engine Optimization (GEO) capabilities alongside their SEO capabilities. The acquisition will help integrate both GEO capabilities and SEO expertise to help brands improve their visibility and expand audience reach. Semrush’s solutions are helping marketers remain discoverable in AI search.

Semrush is publicly traded and had reported revenues of $112.1 million with a loss of $4.5 million for its last reported third quarter. It was expecting to end the year with revenues of $443.5-$445.5 million and a net operating margin of 12%. In its most recent quarter, Semrush reported a 33% growth in its ARR and it boasts of customers like Amazon, JPMorgan Chase, and TikTok within its enterprise portfolio.

A few years ago, Adobe had planned to acquire Figma, but regulatory concerns stalled the acquisition. This is the first acquisition that Adobe has made since that deal fell through. Analysts believe that the Semrush acquisition will complement Adobe’s offerings. As Adobe pushes into performance and analytics, Semrush will help meet the demand gap between Adobe’s content creation capabilities and market visibility. Semrush’s SEO expertise, demand insights, content audits, and competitive intelligence will help Adobe connect better with CMOs and marketing teams. It will also strengthen Adobe’s AI flywheel by supplying automation tools with real user behavior and search-trend data.

Besides the acquisition, Adobe continues to expand its AI offerings through product enhancements. It recently launched Adobe Photoshop, Adobe Express, and Adobe Acrobat for ChatGPT. By combining Adobe’s creative technology with ChatGPT’s conversational interface, Adobe apps for ChatGPT will make it easier for anyone to create new content. With Adobe apps for ChatGPT, users will be able to easily edit and uplevel images with Adobe Photoshop, create and personalize designs with Adobe Expressandtransform, and organize documents with Adobe Acrobat.

Last quarter, Adobe also announced the expansion of its strategic partnership with Google Cloud. As part of the expanded deal, Adobe customers will have access to Google’s latest AI models within Adobe’s creative apps. Adobe’s enterprise customers will also be able to use Google’s AI models on Google Cloud’s Vertex AI platform and apply their proprietary data for customization through Adobe Firefly Foundry. Adobe and Google Cloud will work together to expand access to AI innovations for customers worldwide and will collaborate to keep innovating across the portfolio.

Adobe’s stock is trading at $327.65 with a market capitalization of $131.3 billion. It touched a 52-week high of $465.70 in February last year. Yesterday, it had dropped to 52-week low levels of $309.23. The markets are worried that despite the moves, Adobe will not be able to drive growth fast enough. Adobe itself announced that its ARR growth will be just over 10% in 2026, compared with 11.5% in 2025.

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