Adobe Bulls Lean on AI, Bears Watch the Guidance Floor

Adobe enters December's earnings window with a familiar tension: AI metrics that look genuinely strong, and a stock that has fallen 29% in 2026 as the market struggles to reconcile them with flat full-year guidance and renewal uncertainty.

Options traders have turned notably more bullish than usual. The put/call ratio has dropped to 0.55, more than a standard deviation below its 20-day average of 0.61, and close to the lowest level of the past year (the 52-week floor is 0.52). That shift has been consistent: the ratio was running above 0.65 through most of October before sliding sharply after mid-month. Call demand is outpacing puts by a wider margin than normal heading into the December 9 print.

Short positioning tells a quieter story. At 4.2% of free float, Adobe's short interest is real but not aggressive, sitting roughly flat on the week and down modestly on the month. The borrow market is completely uncrowded: availability runs at more than 5,000% of short interest, meaning the lending pool is essentially unconstrained, and borrowing costs have drifted up only slightly to 0.38%, a low absolute level even after an 11% weekly rise. There is no squeeze pressure here, and no sign that the short base is building urgency ahead of the print.

The Street has been moving in one direction for months. HSBC and Wells Fargo both downgraded Adobe in mid-October, with Wells cutting all the way from Overweight to Underweight with a $225 target. The post-Q3 reaction in September saw a cluster of target reductions from JPMorgan (to $315), Citigroup (to $250) and Jefferies (to $275), all maintained with neutral-to-positive ratings but reflecting lower conviction on the growth path. The consensus mean target of $268 implies modest upside from the current $246, but the distribution has widened: bears point to held guidance, renewal risk, and a freemium strategy that is growing users faster than revenue. Bulls counter with Firefly ARR up 40% quarter on quarter, AI-first ARR above $650M and growing 150% year on year, and a valuation that at a P/E of around 9 looks unusually compressed for a franchise of this quality. Factor scores add nuance: earnings yield and EV/EBIT both rank in the top 20% of the software universe, while EPS momentum over the past 90 days sits in the bottom 40%, a value-momentum split that explains why the stock has attracted buyers on dips but not sustained a recovery.

One alt-data point from Adobe's own corporate filings is worth noting. SEC EDGAR buyback data shows shares repurchased up 87% year on year in Q2 2025, though the most recent quarter available (Q2 2026, through August) shows buyback spend down 40% year on year to $2.1 billion. The directional shift in capital allocation is a data point, not a verdict on the December print.

Retail attention has faded markedly. Wikipedia page views and ORTEX page traffic are running roughly 2.2 standard deviations below their own 90-day history, the weakest attention reading of the recent period. That can cut both ways ahead of an earnings date: lower retail noise, but also less speculative heat to amplify any move.

Adobe's earnings history offers a narrow reference point. The June 2026 quarter produced a sharp one-day drop of 12.6% and a five-day loss of 16.4%. The September print was milder, with a 1% one-day decline. With the next report on December 9, the question is whether the AI growth numbers can move fast enough to change a guidance conversation that has weighed on the stock all year.