Is Adobe Losing the AI Narrative? A Closer Look at Trust, Growth, and Strategy

In the rise of generative AI, Adobe was once considered one of the few companies positioned to lead the development of creative infrastructure. With native asset libraries, active participation in standard-setting, and an integrated platform approach, Adobe was seen as a system-level player. Yet between late 2024 and mid-2025, cracks began to form in the market’s perception. As tools like Firefly and GenStudio failed to gain meaningful traction, and as confidence in Adobe’s positioning began to fade, the company found itself undergoing a subtle but significant test of narrative and trust. Drawing from Soros’ theory of reflexivity, this piece tracks Adobe’s shift from narrative peak to a more fragile moment and offers five signals worth watching as the company attempts to rebuild belief.

Adobe has long been recognized as a leader in creative software. But in the generative AI era, its platform strategy and growth narrative are facing growing scrutiny. This article explores how Adobe’s position is evolving, why investor confidence is shifting, what signals to watch, and how trust might be rebuilt.

In the early days of generative AI, Adobe was widely seen as one of the few system-level companies with a strategic edge. It combined native creative assets, regulatory engagement, and an integrated content platform. From Firefly to Express to its work on content credentials, Adobe aimed to embed AI capabilities directly into the fabric of its architecture. The goal wasn’t just faster models. It was a deeper vision of trust, compliance, and ecosystem alignment.

But between late 2024 and mid-2025, that perception began to shift.

This article continues our exploration from two earlier pieces: “Adobe is not just an AI company” and “Adobe Under Pressure.” It offers a more focused look at how market sentiment toward Adobe has quietly but meaningfully changed.

1.  A Narrative Shift: From Confidence to Doubt

Adobe’s Q2 earnings were not bad by any traditional measure. Both revenue and EPS came in slightly above analyst expectations, and full-year guidance was modestly raised. The only element that gave investors pause was a somewhat cautious Q3 outlook.

At first glance, this seemed like a minor adjustment. But in hindsight, it exposed a deeper tension in the market’s expectations.

The issue wasn’t the numbers. It was the story behind them. Was Adobe still the company expected to lead the infrastructure layer of generative content? That story had once felt solid. Adobe positioned itself as the platform that would make creators more productive through AI, and the market embraced that vision.

But things have changed.

As AI integration progressed more slowly than hoped, and as user adoption lagged, especially in products like Express, the once-coherent narrative began to weaken. While Adobe has continued to emphasize ARR growth (annual recurring revenue from subscriptions) from AI tools and the strategic relevance of content authenticity, investors have started to ask a different set of questions:

• Are these tools being meaningfully adopted by creators?
• How much of this revenue is truly new, and how much is simply upgrades to existing users?
• Is AI-driven growth strong enough to compensate for deceleration in Creative Cloud?

These shifts don’t indicate a broken business, but they have diluted the force of a once-persuasive story: that Adobe would be the uncontested winner of the AI creativity era.

2.  Reflexivity at Work: When Price and Narrative Fall Out of Sync

Soros’ reflexivity theory reminds us that prices and narratives can reinforce each other, until reality begins to pull them apart.

We can think of a typical market narrative moving through six stages:

1. A hidden underlying shift
2. Early recognition of a trend
3. Story gains traction and confidence builds
4. Optimism turns into overexuberance
5. The story begins to waver
6. The story breaks and prices fall sharply

Adobe’s current position appears to lie somewhere between stages four and five. The narrative is no longer rising, but not yet in freefall. Despite efforts to emphasize new growth drivers, Adobe’s recent earnings have triggered unusually sharp price reactions. What investors are responding to is not poor financial performance. It is a growing sense that the story may no longer hold.

Firefly, despite being out for over a year, has not yet generated clear network effects. GenStudio is still far from becoming a central tool in enterprise workflows. And while the content credentials framework has real long-term potential, its short-term financial contribution is minimal.

None of these are fatal flaws. But when expectations rise faster than actual traction, trust becomes fragile, and price movements begin to reflect that fragility.

3.  Why Traditional Industry Analysis May No Longer Be Enough

Adobe’s challenge today is not the result of a failed product or poor leadership. It is about role ambiguity. In the age of generative AI, Adobe’s position has become harder to define.

Is it still the default creative workflow platform? Or is it being slowly eroded by tools like Canva, Figma, Runway, and others that move faster or target different user behaviors?

This explains why the market’s reaction seems disproportionate to the actual numbers. What’s being reevaluated isn’t just performance. It’s belief. Investors are no longer asking whether Adobe’s products are working. They’re asking whether Adobe still plays the central role it once did.

As someone trained in industry research, I’ve always focused on fundamentals: revenue structure, product evolution, market competition. But this moment with Adobe has reminded me that markets often care just as much, if not more, about the continuity of belief.

Narrative analysis doesn’t replace industry analysis. But it allows us to detect inflection points in sentiment, before they fully materialize in financial results.

You can track how many users Adobe adds each quarter. You can model churn rates and pricing sensitivity. But only narrative analysis can tell you when the market stops believing that Adobe is the anchor of AI-enabled creativity.

For me, this has been a meaningful shift in how I observe.

4.  Rebuilding the Story: Five Signals to Watch

In times like this, the question isn’t just whether Adobe is undervalued. It is whether the company still has the ability to rebuild a credible narrative.

Here are five areas that may determine what happens next:

1. Can Q3 earnings exceed expectations? A positive surprise could help shift the narrative tone and stabilize sentiment.
2. Will Adobe’s content credential standard gain broader adoption? If platforms like Apple or Meta begin to support it, Adobe’s role could shift from peripheral to foundational.
3. Can GenStudio gain meaningful enterprise traction? If early adopters like Delta, T. Rowe Price, or GM expand their use, Adobe may build stronger momentum in B2B content workflows.
4. Will Adobe’s generative AI tools show clear differentiation? Are users willing to pay for compliance, quality, and creative integrity?
5. Can Adobe establish a new platform-level narrative? Initiatives like CAI (Content Authenticity Initiative), generative design formats, or workflow APIs could create long-term advantages, especially if tied to ecosystem partnerships.

None of these factors alone will restore trust. But together, they represent the starting points of potential narrative repair.

Conclusion: Is Adobe Facing the First Trust Inflection of the AI Era? It’s not about results. It’s about belief.

Amid the rise and recalibration of generative AI stories, Adobe may be among the first major software firms to enter a phase of narrative uncertainty. Not because it has failed, but because its once-stable role has begun to feel negotiable.

Soros once wrote that markets are not mirrors. They are magnifying glasses. They amplify the stories we tell, until those stories can no longer bear their own weight.

As we reflect on Adobe’s journey over the past year, we might ask:

• Who gets to maintain narrative continuity in the age of generative AI?
• And who can rebuild trust once the momentum of belief begins to slow?

Adobe isn’t out of the picture. But it is standing on the edge of a deeper test, where market perception, corporate storytelling, and strategic delivery must reconnect.

That alone makes Adobe a case worth returning to—with curiosity and care.

This article is part of our Global Business Dynamics series.
It explores how companies, industries, and ecosystems are responding to global forces such as supply chain shifts, geopolitical changes, cross-border strategies, and market realignments.

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