Prediction: Adobe Stock Trades Back Above $350 Before 2030

Key Points

• Adobe's annualized recurring revenue reached $27.5 billion at the end of the fiscal third quarter, rising 11.2% year over year.

• Management targets adjusted earnings per share between $24.45 and $24.50 for fiscal 2026, up roughly 17% from last year.

• A $25 billion buyback authorization runs through April 2030, and $24.55 billion of it is still unspent.

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Adobe (NASDAQ:ADBE) has posted record revenue in each quarterly update this fiscal year. But the stock has fallen anyway.

Shares are at roughly $241 as of this writing, off around 34% from a 52-week high of $363.70.

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I think the market has it wrong. My prediction is that the stock trades back above $350 before 2030. That would be a rise of around 45% with a bit over three years to do it -- around 12% a year.

Getting there doesn't take a dramatic turnaround. Adobe only has to keep doing three things it's already doing: growing recurring revenue at a double-digit pace, holding its operating margin steady, and retiring shares under a buyback authorization that runs through April 2030 -- almost exactly this prediction's window.

The recurring-revenue base is still compounding

The tech company's engine is subscriptions. Total annualized recurring revenue (ARR), the yearly value of the company's subscription contracts, finished the fiscal first quarter of 2026 at $26.1 billion and the fiscal second quarter at $27.1 billion (including roughly $480 million from the Semrush acquisition). By the close of the fiscal third quarter on Aug. 28, ARR sat at $27.5 billion, up 11.2% year over year.

And management's full-year target is 10.2% growth in the company's total recurring-revenue base. Put another way, over $2 billion of new recurring revenue adds to the base in a year.

Revenue is climbing with it. The company's last quarter, reported earlier this month, brought in record revenue of $6.76 billion, up 13% year over year, matching the fiscal second quarter's rate. Non-GAAP (adjusted) earnings per share rose roughly 15% to $6.13.

Steady margins, shrinking share count

Profitability is holding up, too. Alongside the fiscal third-quarter update, management lifted its full-year targets. It now sees fiscal 2026 revenue of roughly $26.6 billion and adjusted earnings per share between $24.45 and $24.50, up roughly 17% from fiscal 2025's $20.94. The targets assume an adjusted operating margin of around 45%.

And the share count keeps shrinking. Adobe spent $6.82 billion buying back 26.1 million shares during the first nine months of fiscal 2026, finishing the $25 billion repurchase program its board approved in March 2024.

In April, the board authorized a new $25 billion of buybacks through April 30, 2030. And $24.55 billion of it was still unspent at the end of the quarter. At today's stock price, that could retire about a quarter of Adobe's shares.

"With focused execution and disciplined investments, we are driving long-term durable growth," interim CFO Steve Day said on the company's fiscal third-quarter earnings call.

What needs to happen by 2029?

Management's fiscal 2026 earnings target comes to roughly $24.47 per share at the midpoint. Now say growth cools, with ARR growth slowing to around 10% annually as the operating margin and the buyback pace simply hold. A mix like that could still boost adjusted earnings per share by 12% to 14% a year, well under this year's expected 17%.

Even at the low end, earnings would hit roughly $34 by fiscal 2029, which ends in November that year. At $350, the stock would cost a bit over 10 times those earnings.

For context, shares cost around 10 times this year's earnings target now -- and around 8.5 times next fiscal year's expected earnings. The market might never pay a premium for Adobe again, and this prediction doesn't need it to. It only needs the earnings to show up while the stock's price-to-earnings multiple stays flat.

The risk, of course, is the recurring-revenue growth itself. The stock's low valuation arguably reflects a market bracing for AI tools from newer rivals to cut into Adobe's business over time. If ARR growth slows to the low single digits in the next couple of years, profit growth stalls with it. The buyback would still nudge earnings per share up, but it can't replace the growth.

But through three quarters of fiscal 2026, there's no sign of that. Growth has stayed between 11% and 13% all year, and management lifted its targets this month instead of trimming them.

In the end, I think the earnings power Adobe is already guiding for, compounded a few more years and concentrated onto a shrinking share count, takes the stock past $350 with time to spare. Granted, a three-year forecast leaves lots of room for the competitive picture to shift, and this one rests entirely on the subscription base continuing to compound. For now, it's compounding.

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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.