Adobe's Stock Plummets 10% Due to AI Competition and Disappointing Forecast

Adobe Inc. dropped about 10% in extended trading after giving a weak outlook for sales in the current quarter, citing concerns about competition from new AI-focused startups. The company's revenue forecast of $5.25 billion to $5.3 billion fell short of analysts' average estimate of $5.31 billion, and its profit outlook also missed expectations. Adobe has been facing anxieties about new generative AI-based startups cutting into its market, and its response has been to integrate its proprietary AI model, Firefly, into its top products. The company is optimistic about its AI initiatives but disappointed investors with lower-than-expected recurring creative business and underperformance in stock value.