Adobe is replacing CEO Shantanu Narayen after 18 years with Anil Chakravarthy, effective December 1, while a second top executive, David Wadhwani, also departs. The announcement wiped nearly 7% off Adobe shares in a single day, as Wall Street questions whether the company can turn generative AI from a threat into new revenue.
Adobe shares fell nearly 7% on September 4, a day after the software maker announced that Anil Chakravarthy will become president and CEO on December 1, succeeding Shantanu Narayen. Narayen, who has run Adobe for more than 18 years, will move into the role of executive chair rather than leave the company outright.
The drop landed on a stock already under pressure: Adobe had fallen more than 21% in 2025 and was down 18% in 2026 before the announcement. The leadership change also was not limited to the CEO seat. David Wadhwani, who ran Adobe's creativity and productivity business for almost five years and was seen as a potential CEO candidate, said he is stepping down following Chakravarthy's appointment.
Analysts disagree on the AI threat
The succession comes as investors weigh whether generative AI is eroding the economics of Adobe's Creative Cloud business faster than the company can adapt. Morgan Stanley downgraded Adobe to Underweight from Equalweight in July and cut its price target to $240 from $365, citing simultaneous transitions in Adobe's freemium strategy, leadership, and AI investment. Not every analyst shares that view, however. Barclays raised its target to $295 from $250 while keeping an Equalweight rating. RBC Capital raised its target to $315 from $285 while maintaining an Outperform rating.
Chakravarthy joined Adobe in 2020 after serving as CEO of Informatica, then oversaw the company's Digital Experience business before running international field operations and, most recently, its Customer Experience Orchestration business. Narayen described Chakravarthy as a "transformational leader" with deep knowledge of Adobe's business.
A test comes before the transition even starts
Adobe's fiscal third-quarter earnings are due on September 10, giving investors their first chance since the announcement to gauge the company's financial performance and its AI strategy. Reuters reported that Adobe raised its annual profit forecast in June on rising demand for its AI-powered products. Investors, though, are looking for proof that Firefly and Adobe's other generative AI tools can protect, and eventually grow, the subscription revenue built around Photoshop, Illustrator, and Creative Cloud.
Narayen's tenure took Adobe from a company generating under $1 billion in annual revenue to one that crossed the $25 billion mark, largely on the back of Adobe's shift from perpetual software licenses to cloud subscriptions, a transition the company completed in 2013. Chakravarthy now inherits the question of whether Adobe's stock market standing can hold up as AI tools make it easier for anyone to produce professional-looking creative content.
Sources: TheStreet, Crypto Briefing
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