Adobe shares drop as CEO exit spotlights crucial AI strategy

By Zaheer Kachwala and Joel Jose

March 13 (Reuters) – Adobe’s battered shares fell another 7% on Friday as news that the Photoshop maker’s long-time CEO will step down cast fresh doubts over its strategy to battle mounting AI competition.

Shantanu Narayen is credited with crafting the modern Adobe by turning its creative tools into a subscription service with more reliable revenue. But an influx of artificial intelligence rivals that can create images at low cost and with a simple text prompt has in recent years raised doubts about its position.

Adobe did not disclose on Thursday when it will name a successor for Narayen, who was CEO for 18 years and will remain board chair. Analysts said the lack of clarity fanned investor fears and eclipsed quarterly results that included better-than-expected sales and strong monthly active user growth.

“The market already viewed Adobe as on the wrong side of the early AI winners and losers, and the CEO stepping down without a clear succession plan has simply deepened that scepticism,” said Ben Barringer, head of technology research at Quilter Cheviot.

Its strategy needs faster execution rather than a complete reinvention and the transition risks slowing decision-making when rivals have ramped up product releases, Barringer said.

Adobe’s rivals, Canva and Figma , have ramped up launches of GenAI image, video and editing tools, releasing their own product suites to grab market share.

Marketers and movie studios are also embracing the technology, striking partnerships and using generative features to create campaigns and short films to target audiences.

The stock has recently been caught in a broader selloff triggered by the rise of new generative AI tools that threaten to supplant traditional software.

Adobe’s shares have declined about 23% so far this year, after falling more than 20% each in the past two years. Still, they saw a more than six-fold gain during Narayen’s tenure.

(Reporting by Joel Jose and Zaheer Kachwala in Bengaluru; Editing by Maju Samuel)