Adobe Soars 2.6% on Q4 Earnings Surge and AI Momentum – Can the Rally Sustain?

Summary
• Adobe (ADBE) surges 2.6% to $352.15, driven by Q4 earnings and AI integration
• Digital Media revenue hits $4.62B, AI features see 3x QoQ growth
• Semrush acquisition and $10B+ cash reserves fuel investor optimism
Adobe’s stock is trading at its highest level since December 2025, with a 2.6% intraday gain amid a $356.97 high and $333.79 low. The rally follows a Q4 earnings report highlighting AI-driven revenue growth and a $1.9B Semrush acquisition, signaling Adobe’s aggressive push into AI-powered creative tools and marketing analytics.

Q4 Earnings and AI Integration Fuel Adobe's Rally
Adobe’s 2.6% surge stems from a Q4 earnings report that exceeded expectations, with $6.19B in revenue and $5.50 non-GAAP EPS. The company’s AI initiatives, including Firefly AI’s 3x QoQ usage growth and Acrobat Studio’s 50% upgrade rate, are directly monetizing AI adoption. Additionally, the Semrush acquisition and $10B+ cash reserves reinforce confidence in Adobe’s ability to scale its AI-driven offerings, particularly in Creative Cloud and Experience Cloud.

Options and ETFs for Capitalizing on Adobe's Volatility
• Leverage Shares 2X Long ADBE Daily ETF (ADBG): 5.13% intraday gain, ideal for short-term bullish bets
• RSI: 68.35 (overbought), MACD: 1.09 (bullish), 200D MA: $368.09 (above price)
• Bollinger Bands: Price at $352.15 (above middle band of $327.79), suggesting short-term strength
Adobe’s technicals indicate a short-term bullish trend but a long-term bearish bias. Key support/resistance levels at $322.56–$323.24 and $348.50–$351.28, respectively, define critical thresholds. The 2X leveraged ADBG ETF amplifies exposure to Adobe’s volatility, while options offer targeted plays on near-term momentum.
Top Options:
• ADBE20251219C350 (Call, $350 strike, 12/19 expiry): IV 33.70%, leverage 38.21%, delta 0.58, theta -1.307, gamma 0.020893, turnover $5.32M
• ADBE20251219C355 (Call, $355 strike, 12/19 expiry): IV 34.93%, leverage 50.65%, delta 0.478, theta -1.171, gamma 0.020574, turnover $459K
ADBE20251219C350 offers a high leverage ratio (38.21%) and moderate delta (0.58), ideal for a 5% upside scenario (projected price $369.76). ADBE20251219C355 provides a 50.65% leverage ratio with a delta of 0.478, balancing gamma (0.020574) and theta (-1.171) for short-term volatility. Both contracts benefit from high turnover and moderate IV, making them liquid and responsive to price swings. Aggressive bulls may consider ADBE20251219C350 into a bounce above $350, while ADBE20251219C355 suits a breakout above $355.

Backtest Adobe Stock Performance
The backtest of the ADU's performance after a 3% intraday surge from 2022 to the present shows mixed results. While the 3-day win rate is relatively high at 50.52%, the 10-day and 30-day win rates decline to 48.64% and 44.05%, respectively. The average returns over these periods are negative, with a maximum return of only 0.04% during the backtest period.

Adobe's AI-Driven Momentum: A Short-Term Buy or Sell?
Adobe’s rally hinges on its ability to sustain AI-driven revenue growth and integrate Semrush into its ecosystem. The 2.6% intraday gain reflects optimism in its AI monetization, but the 52W high of $473.62 remains a distant target. Investors should monitor the $348.50–$351.28 resistance zone and the 200D MA at $368.09 for long-term direction. Sector leader Microsoft (MSFT) is up 0.37%, underscoring the broader AI software sector’s strength. Act now: Watch for a break above $356.97 for a bullish continuation or a drop below $333.79 to trigger defensive positioning.