Adobe Inc. (ADBE) shares plummeted over 9% in pre-market trading on Thursday, following the company's better-than-expected fiscal fourth-quarter earnings report and disappointing guidance for fiscal 2025.

While Adobe's Q4 non-GAAP earnings of $4.81 per share and revenue of $5.61 billion surpassed analysts' estimates, the company's outlook for fiscal 2025 fell short of Wall Street's expectations, raising concerns about its ability to effectively monetize its artificial intelligence (AI) offerings and fend off rising competition from generative AI platforms.

Adobe projected fiscal 2025 revenue in the range of $23.30 billion to $23.55 billion, lower than the consensus estimate of $23.78 billion. Additionally, the software giant's non-GAAP earnings guidance of $20.20 to $20.50 per share for fiscal 2025 narrowly missed analysts' expectations of $20.54 per share.

The company attributed the muted outlook to headwinds from foreign exchange rates and the ongoing transition from perpetual licensing to subscription-based models. However, investors appear concerned about Adobe's ability to capitalize on the growing demand for AI-powered creative tools and generate substantial revenue growth in the face of increasing competition from well-capitalized startups such as OpenAI and Runway AI.

While Adobe is integrating its proprietary Firefly AI model into its creative software applications, there are worries that the company's investments in AI are taking longer to translate into meaningful revenue growth. The lackluster guidance for fiscal 2025 has fueled concerns about Adobe's prospects in the rapidly evolving AI landscape, leading to a selloff in the company's shares.