Adobe (ADBE) Plunges 2.68% Amid AI Skepticism and Sector Weakness: What’s Fueling the Selloff?

Summary
• Adobe (ADBE) trades at $343.3, down 2.68% intraday, marking its worst performance since Q3 2025 earnings.
• The stock hit a 52-week low of $340.05 and a high of $349.83, reflecting volatile sentiment.
• Recent news highlights Adobe’s AI-driven growth but underscores investor concerns over AI’s long-term impact on creative software.

Adobe’s sharp decline has drawn attention as the stock struggles to regain momentum despite strong Q3 earnings. The selloff coincides with broader sector jitters and mixed reactions to Adobe’s AI integration strategies. With the stock trading below key moving averages and options activity surging, traders are recalibrating positions ahead of critical technical levels.

AI Skepticism and Sector Weakness Weigh on Adobe
Adobe’s intraday selloff stems from a confluence of factors: lingering doubts about AI’s disruptive potential in creative software, mixed sector performance, and technical indicators pointing to bearish momentum. Despite Q3 earnings beating estimates and raising FY25 guidance, investors remain wary of AI’s ability to sustain Adobe’s premium pricing. The stock’s 21% year-to-date decline has outpaced the Nasdaq’s 14% gain, reflecting a broader skepticism toward AI-driven growth narratives in the software sector. Additionally, Adobe’s recent product launches, including a free iPhone version of Premiere Pro, have sparked concerns over margin compression and competitive pressures.

Options and ETFs for Navigating Adobe’s Volatility
• 200-day average: $394.97 (well below current price)
• RSI: 52.44 (neutral, but trending lower)
• MACD: 0.668 (bullish signal, but histogram negative)
• Bollinger Bands: Lower band at $341.84 (near support)

Adobe’s technical profile suggests a short-term bearish bias, with the 200-day MA acting as a formidable resistance. The stock is trading near its 20-day Bollinger Band support at $341.84, offering a potential short-term floor. For traders, the key is to monitor the 345–350 range, where a breakout could signal a reversal. Given the stock’s volatility and options activity, leveraged ETFs like XLK (Semiconductor Select Sector SPDR) or XLF (Financial Select Sector SPDR) could offer sector exposure, though Adobe lacks a direct leveraged ETF.

Top Options Picks:
• ADBE20251010P345 (Put Option):
- Strike Price: $345
- Expiration: 2025-10-10
- IV: 30.38% (moderate)
- Leverage Ratio: 53.28% (high)
- Delta: 0.4887 (moderate sensitivity)
- Theta: -1.0164 (high time decay)
- Gamma: 0.0231 (high sensitivity to price changes)
- Turnover: 342,778 (liquid)
- Payoff (5% downside): $10.75 per contract (max profit if ADBE drops to $326.14).
- Why it stands out: High leverage and gamma make this put ideal for a bearish bet, with strong liquidity for entry/exit.

• ADBE20251010C340 (Call Option):
- Strike Price: $340
- Expiration: 2025-10-10
- IV: 31.57% (moderate)
- Leverage Ratio: 36.80% (high)
- Delta: 0.6002 (moderate sensitivity)
- Theta: -1.1662 (high time decay)
- Gamma: 0.0215 (high sensitivity to price changes)
- Turnover: 214,706 (liquid)
- Payoff (5% downside): $0 (out-of-the-money if ADBE drops to $326.14).
- Why it stands out: A high-gamma call for aggressive bulls betting on a rebound above $340, with strong liquidity.

Trading Setup: Aggressive short-sellers may consider ADBE20251010P345 if the stock breaks below $341.84. For a bullish play, ADBE20251010C340 offers leverage if Adobe rebounds above $345. Watch for a breakdown below $340 to confirm bearish momentum.

Backtest Adobe Stock Performance
Adobe's stock performance after a notable -3% intraday plunge in 2022 has shown resilience and a strong recovery. Here's a detailed analysis of the key points:1. Earnings Performance: Adobe's quarterly earnings for Q4 2022 exceeded expectations, with earnings per share (EPS) of $3.60, surpassing the Zacks Consensus Estimate of $3.50. This marks a significant improvement from the $3.20 per share earned in the same period the previous year. The company's consistent performance in exceeding EPS estimates over the past four quarters reflects its strong financial health and operational efficiency.2. Stock Reaction to Acquisition: Adobe's acquisition of Figma, announced in September 2022, initially led to a significant drop in its stock price, with a approximately 16% decline on the day of the announcement. However, this negative reaction was short-lived, and the stock has since rebounded, demonstrating investor confidence in the acquisition's long-term potential.3. Market Perception and Recovery: Despite the initial market concerns, Adobe's stock has shown a robust recovery. The company's reaffirmation of its financial targets for Q4 2022 and preliminary targets for FY 2023 has positively influenced investor sentiment. The guidance provided for FY 2023, although slightly below analyst expectations, has not hindered the stock's upward trajectory.4. Comparison with Broader Market: Adobe's stock performance has outpaced the broader Computer and Technology sector's gains over the past month. This indicates strong investor confidence in Adobe's strategic direction and growth prospects.In conclusion, Adobe's stock has demonstrated robust resilience and recovery following a significant intraday plunge in 2022. The company's strong financial performance, strategic acquisitions, and positive market guidance have all contributed to its positive stock performance.

Adobe’s Crossroads: Defend $340 or Face Further Selloff
Adobe’s near-term outlook hinges on its ability to hold the $340 support level, which aligns with the lower Bollinger Band and 20-day moving average. A breakdown below this level could trigger a test of the $330–$325 range, where key put options like ADBE20251010P325 offer high leverage. Conversely, a rebound above $345 would signal a potential reversal, though the 200-day MA at $394.97 remains a distant target. Investors should monitor Adobe’s AI-driven product launches and Q4 guidance for catalysts. Meanwhile, sector leader Microsoft (MSFT), up 0.13% intraday, offers a contrast in performance, highlighting the software sector’s mixed sentiment. For Adobe, the path forward is fraught with technical and thematic challenges—defensive positioning or strategic options plays may be prudent ahead of critical support/resistance levels.