Design software maker Adobe announced on Thursday that its long-serving Chief Executive Officer, Shantanu Narayen, will depart once a successor is appointed. Following the news, the company's stock fell more than 7% in after-hours trading, reigniting market concerns over its strategy as it navigates the disruptive impact of artificial intelligence.

Narayen has led Adobe as CEO for 18 years, a period during which he helped transform its flagship software—including Photoshop, Illustrator, Premiere Pro, and InDesign—into household names for creative professionals worldwide.

The company stated that Narayen will remain as Chairman of the Board to support the incoming CEO. However, news of his impending departure has unsettled investors, coming at a time when Adobe is intensifying its focus on artificial intelligence, actively pursuing partnerships and exploring acquisition opportunities to strengthen its industry leadership.

Additionally, Adobe released its quarterly financial results on Thursday, reporting double-digit growth in both total revenue and customer subscription revenue, indicating sustained strong spending on its product suite.

"Investors are likely focused on whether new leadership can strike a balance between disciplined execution and aggressive AI investment, especially as competition heats up in creative and enterprise AI," said Emarketer analyst Grace Harmon.

Growing concerns have also emerged with the rise of new automated AI tools and agents. Many fear these innovations could disrupt traditional software subscription models and give rise to faster, more cost-effective product development methods.

Harmon noted that although Adobe has invested heavily in AI to enhance its product portfolio, "investor skepticism around the timeline for AI monetization and returns may be contributing to the stock decline."

Adobe's stock has fallen approximately 22% year-to-date, following a decline of over 21% in 2025, reflecting investor unease regarding its AI strategy and outlook.

According to data compiled by LSEG, the company projected second-quarter revenue between $6.43 billion and $6.48 billion, compared with a prior estimate of $6.43 billion.

The company reported first-quarter revenue of $6.4 billion, surpassing the earlier expectation of $6.28 billion.

On an adjusted basis, the company earned $6.06 per share, exceeding the anticipated $5.87 per share.