Adobe is 'frightened' by AI startups.

According to TechNewsSpace , despite meeting analysts' expectations in the first quarter of the fiscal year (ending March 1), Adobe issued a less optimistic forecast for the current quarter, causing the company's stock to fall 10%.

At the end of the last quarter, Adobe's revenue increased 11% to $5.18 billion. Earnings per share (excluding certain items) reached $4.48, while Wall Street analysts had expected figures of $5.14 billion and $4.38, respectively. The Digital Media segment (comprising Adobe's leading creative software products) recorded revenue growth of 12% to $3.82 billion; revenue from the marketing and analytics software segment increased 10% to $1.29 billion.

Adobe is wary of AI startups.

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However, Adobe's forecast for the current period did not meet analysts' expectations, as the company projected revenue of $5.25-$5.3 billion, lower than the $5.31 billion forecast; earnings per share were $4.40 compared to analysts' forecast of $4.38.

As a leading name in software development for creative professionals, Adobe is facing concerns about market encroachment by startups developing next-generation artificial intelligence (AI) systems. To counter this threat, Adobe has introduced its own AI model, Firefly, into advanced products such as Photoshop and Illustrator.

The emergence of OpenAI's Sora video creation model has once again raised doubts among investors. Adobe CEO Shantanu Narayen stated, "Perhaps expectations were a little higher than what we delivered. But I am very optimistic about what we have achieved."

According to Narayen, innovations in AI-powered video creation will, conversely, increase demand for Adobe's existing products. He believes that in the next 10 years, AI will no longer be able to "recreate" an Oscar-winning film like Oppenheimer based solely on written instructions. The company will introduce new video tools in the coming months.

Additionally, Adobe announced a new $25 billion stock repurchase program. The previous $15 billion stock repurchase program is set to expire at the end of fiscal year 2024.

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