Operator

Good day, and welcome to Q2 FY 2026 Adobe Earnings Conference Call. Today’s conference is being recorded.

At this time, I’d like to turn the conference over to Doug Clark, Vice President of Investor Relations. Please go ahead.

Douglas Clark
Vice President of Investor Relations

Good afternoon, and thank you for joining us. With me on the call today are Shantanu Narayen, Adobe’s Chair and CEO; David Wadhwani, President of Creativity and Productivity; Anil Chakravarthy, President of Customer Experience Orchestration; and Steve Day, Senior Vice President, Corporate Finance and CFO of Customer Experience orchestration.

On this call, which is being recorded, we will discuss Adobe’s second quarter fiscal year 2026 financial results. You can find our press release, as well as PDFs of our prepared remarks and financial results on Adobe’s Investor Relations website.

The information discussed on this call, including our financial targets and product plans, is as of today, June 11, and contains forward-looking statements that involve risks, uncertainty and assumptions. Actual results may differ materially from those set forth in these statements. For more information on those risks, please review today’s earnings release and Adobe’s SEC filings.

IT shares extended their losing streak to the seventh straight session Thursday, the longest since September 2025, as fresh AI-disruption jitters gripped investors amid declines in global tech stocks.

The Nifty IT index fell as much as 2.7% intraday before ending at 27,821, down 1.6% and the lowest closing level since May 15. The benchmark Nifty50 ended 0.2% lower.

“Indian IT companies were hammered due to Anthropic launching a new AI model that increased the risk to the revenue for domestic tech players,” said Kotak Securities senior vice-president Sumit Pokharna.

The newly launched model has higher capabilities than previous ones and the faster developments are increasing the pressure on application development and maintenance companies, Pokharna said.

Anthropic launched a Mythos class model, called Claude Fable 5, for general use on June 9.
Sentiment was also hurt by a 2% fall in the Nasdaq Composite Index Wednesday, as investors globally see rising risk due to concentration in some front-end AI stocks and are looking to diversify and rotate into other AI-enabler stocks.“The IT sector is in uncharted territory, given the prolonged revenue weakness during a generational technology shift driven by AI,” said Kumar Rakesh, an IT analyst at BNP Paribas. “This makes it difficult to predict whether the worst is over.”

All constituents of the IT index declined on Thursday. LTM dropped 2.6% while Infosys fell 2.3%. Oracle Financial Services Software and HCL Technologies slipped over 1.5% each.

A cyclical recovery, possibly in September, could be the first sign of revival despite ongoing structural challenges; however, this recovery could be delayed depending on geopolitical tensions, said Kumar.

“Investors should avoid companies that are struggling to transition and instead be extremely selective,” he said. “Persistent Systems among midcaps, and Infosys and Tech Mahindra among large caps, are the preferred picks in the sector.”

So far this year, the Nifty IT index has slumped 26.6%. The benchmark Nifty50 is down 11.4%.

Despite improved valuations, the sector has not bottomed out as headwinds like AI disruption, likely rate hikes in the US and geopolitical turbulence continue to weigh on the sector. The outlook is cautious and selective, said analysts. “Pain periods do turn valuations attractive and staggered accumulation of Infosys, TCS, Tech Mahindra along with Coforge can be considered for a two- to three-year horizon,” said Pokharna.

Few IPOs in recent years have been as avidly anticipated and sparked as much debate as rocket and artificial intelligence (AI) company SpaceX’s blockbuster issue. As the Elon Musk-founded company gears up for listing on Friday after attracting record investor bids for its roughly $75 billion IPO, the largest ever, the discussion extends beyond the stock’s debut.

Investors are asking whether it will validate the torrent of money that has flowed into AI-linked companies and prolong Wall Street’s dream bull run or serve as a signal that market optimism has reached its peak. Saudi Aramco’s $29.4 billion issue in 2019 was the largest IPO before this.

Stress Test
The 555.6-million-share IPO of SpaceX was subscribed more than four times on Wednesday night. The bids underscore investor appetite for the hottest investment theme currently, AI, allowing SpaceX to target an eye-popping $1.75 trillion valuation on debut, turning it instantly into one of the world’s most valuable companies.The valuation target, along with the company’s losses and questions over corporate governance, has led to heightened scepticism about the stock’s prospects, with veteran short seller Jim Chanos warning the offering does not justify the astronomical valuation.

SpaceX posted revenue of $18.67 billion in 2025, up 33% from the previous year, along with a net loss of $4.94 billion.
To be sure, it’s also some kind of a referendum on Musk.
To his dedicated fanbase, Musk can do no wrong. Naysayers warn investors against getting swept up in the general euphoria of a listing pop lest they be left holding the pieces down the line.
Beyond the scale, SpaceX’s listing has greater significance for global markets riding the AI wave. It’s a stress test of market appetite for the high-growth, capital-intensive AI theme as equity supply risks are set to rise. It will also signal how much tolerance investors have for losses posted by some stars of the AI firmament.

“There is also a psychological element to the supply-demand picture with SpaceX,” BNP Paribas Securities analysts wrote in a recent client note. “Many investors will likely anticipate that the deal size is only the tip of a supply iceberg.”

OpenAI and rival Anthropic recently made confidential filings for mega IPOs, seeking to capitalise on the voracious investor demand for AI-linked shares. Both these companies may be targeting trillion-dollar valuations.

“Follow-on issuance and stock lock-ups expiring plus possible IPOs for OpenAI and Anthropic collectively amount to much more equity supply,” said the BNP note.

For seasoned investors, a likely glut of AI-linked IPOs and share sales evokes memories of the dotcom boom. At that time, investors snapped up shares at astounding prices, ignoring losses and the absence of viable business models.

As comparisons with previous market bubbles resurface, so too has the familiar refrain that “this time is different” with proponents arguing that the scale of investment flowing into AI and its growing commercial adoption set the current boom apart from past ones.