Adobe stock hits $289, forms golden cross ahead of earnings

Adobe shares rose to $289 this week, their highest level since February, after the 50-day weighted moving average crossed the 200-day moving average, a pattern known as a golden cross. The stock is about 52% above its June low of $190.

The rally accelerated on Thursday after gains in other software names, including a jump in Salesforce shares. Adobe moved above a prior resistance near $275, the level it hit on June 1. Chart patterns also show an inverted head-and-shoulders structure with a low near $190, shoulders at higher lows, and a neckline around $275. Short-term traders are watching $300 as an initial upside target; a sustained move past $300 could put the $362 peak from last December in focus. A drop below $260 would put the recent breakout under pressure.

Market activity behind the advance included buying on pullbacks and a broader rebound in software stocks. Some investors have used the term “SaaSPocalypse” to describe worries that AI could disrupt subscription software businesses. Adobe has disputed that AI developments will derail its subscription model.

Adobe is due to report quarterly results this period. Consensus estimates project revenue of about $6.7 billion for the quarter, an increase of roughly 11.8% from the same period a year earlier. Full-year revenue estimates are near $26 billion, about an 11.6% rise from the prior year.

The company authorized up to $25 billion for share repurchases in April. Adobe’s outstanding share count has declined from 472 million in 2022 to roughly 399 million today.

On valuation, Adobe is trading at a forward price-to-earnings ratio near 11.2, versus a sector median around 22.9 and a five-year company average near 25. The company’s Rule of 40 metric, combining revenue growth and free cash flow margin, is about 50%, based on roughly 11% revenue growth and a free cash flow margin near 39%.

Investors and traders will focus on the upcoming earnings release for confirmation of revenue trends, guidance on demand and margins, and any updates to capital return plans.