While Adobe released better-than-expected third-quarter results, the company's stock suffered during Thursday's after-hours trade.

Following the release of its fourth-quarter fiscal report on Thursday, the powerhouse of creative software witnessed a 10 percent decline in its stock during after-hours trading. Investors may be concerned about the company's soft revenue projection for the next quarter, even if its third-quarter performance exceeded Wall Street expectations.

The San Jose-based company released outstanding third-quarter revenue results, exceeding the $5.37 billion milestone and hitting $5.41 billion.

However, according to reports, Adobe missed analyst estimates with its fourth-quarter earnings estimate, estimating between $4.63 and $4.68 per share on revenue of $5.5 billion to $5.55 billion, compared to $4.67 per share on $5.61 billion in sales.

Adobe's Digital Media division, which offers Creative Cloud subscriptions with the AI-driven Firefly tool, performed admirably, growing by 11 percent year over year and bringing in $4 billion in revenue.

Investors are nevertheless cautious about the possible effects of generative AI on Adobe's economic model, even in light of these encouraging outcomes. Concerns over Adobe's market position have been raised by the emergence of generative AI text-to-image tools like Midjourney and DALL-E 3, as well as the growing popularity of Canva, the company's main rival.

As a result, the company has been releasing its own AI tools quickly. These include the Firefly suite, a generative AI video tool that debuted on September 11, and the Acrobat AI assistant, which was introduced in April of last year.

A quarterly profit of between $4.63 and $4.68 per share, excluding items, is anticipated, as opposed to predictions of $4.67 per share.

Adobe's market value is expected to drop by more than $21 billion if current losses continue.

This year, the company's shares have decreased by around two percent, following a 77 percent increase in 2023.

Adobe stated that it expects to exceed its goals for yearly net new annual recurring revenue (NNARR), indicating that the company's subscription sign-ups are still strong even though it guided fourth-quarter revenue below estimates.

Although the company stated in June that it anticipates robust growth in the second half of the year, the low projection suggests that pressure on purchases is still present.