Should You Buy Adobe Stock After the Company's $25 Billion Share Repurchase Announcement?
Key Points
Adobe's board has authorized a $25 billion stock buyback plan.
The company has been a laggard over the last five years.
It faces several challenges ahead.
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As artificial intelligence (AI) technology has propelled some companies to staggering heights over the last five years, it's left others behind. One of those companies that hasn't found its footing is Adobe (NASDAQ: ADBE). Adobe has been caught in a wave of worry, as investors fear AI will render some software stocks redundant.
In a sign of confidence and reassurance, Adobe recently announced a new stock buyback plan. But for whether investors should have that same confidence, we'll look at what to consider.
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Image source: Getty Images.
The Adobe buyback details
On April 21, Adobe announced that its board had approved a stock buyback plan of up to $25 billion. That plan will run through April 30, 2030, roughly ending four years after the announcement.
If we judge the excitement around the announcement by the stock price, there wasn't much at all. Shares closed at around $247 on the day of the announcement and finished the week on April 24 at a little over $245. In other words, not only did the announcement not move the stock price, but it actually finished the week lower.
Given Adobe's stock price struggles, you would think the business is faring poorly. Surprisingly, revenue has steadily climbed over the last several years. It went from $21.5 billion in 2024 to $23.7 billion in 2025, and its net income increased from $5.5 billion in 2024 to $7.1 billion in 2025. Adobe also just reported record revenue of $6.4 billion in Q1 2026.
The challenges ahead
The $25 billion stock buyback announcement didn't move the needle because there are still plenty of challenges ahead for Adobe, which is why investors shouldn't buy the stock on that news alone.
The company is currently dealing with a leadership transition that it did not seem prepared for. After leading the company for 18 years, CEO Shantanu Narayen will step down when a successor has been found.
Anyone taking over is walking into a difficult situation. The new CEO will have to offer a strong vision that spotlights how the company will navigate and integrate AI more effectively. Whether that means offering a new playbook or slightly tweaking the game plan going forward remains to be seen.
For a software company, Adobe's forward price-to-earnings ratio of 10.4 looks attractive, but looking underneath the hood at all the challenges, it's easy to see why it's so cheap. A turnaround won't happen overnight, so for anyone betting on a turnaround, you're going to have to still give it some time.
Should you buy stock in Adobe right now?
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Jack Delaney has no position 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.
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