Adobe to Buy Semrush in $1.9 Billion Deal. The Digital Marketing Stock Soars.

Adobe reached deal to acquire Semrush Holdings for $12 a share, or a total equity value of $1.9 billion. (Dreamstime)

Key Points

• Adobe announces an agreement to acquire Semrush Holdings in an all-cash transaction that value Semrush at $1.9 billion.
• Adobe will pay $12 a share for Semrush.
• Semrush stock surges following the acquisition announcement.

Adobe said Wednesday it reached a deal to acquire search engine marketing company Semrush Holdings in an all-cash transaction that values Semrush at roughly $1.9 billion.

Under the terms of the deal, Adobe will pay $12 a share for Semrush, which had a market capitalization of $1.01 billion as of Tuesday. The transaction has been approved by directors of both companies and is expected to close in the first half of 2026.

Semrush surged 74% to $11.79. Adobe declined 2.5%.

While Adobe is best known as the maker of industry-standard design software like Photoshop and Premiere, the company has shifted its focus increasingly to artificial intelligence. Adobe released a machine learning platform in 2016, but its pivot to the AI trade was catalyzed by the launch of Firefly, a family of generative AI models, in 2023.

However, it has been less successful in this endeavor than other tech giants that have sought to integrate AI into their product portfolios. Coming into Wednesday, shares have fallen 27% for the year.

Generative AI products from rivals like OpenAI and design-software alternatives like Canva have heaped pressure on the stock, as investors question Adobe’s growth and monetization potential.

Semrush, which went public in 2021, specializes in search engine optimization.

Semrush has seen its shares beaten down this year, falling more than 40%. The decline was fueled by a second-quarter earnings miss as well as broader concerns about AI valuations. Like Adobe, Semrush has pivoted to capitalize on the AI boom, billing itself as an “AI-powered digital marketing platform.”

There is some overlap between its customer base with that of Adobe, too, seeing as both companies cater to businesses. Adobe announced the deal on its Adobe for Business page, writing that the companies would jointly “deliver a comprehensive solution that gives marketers a holistic understanding of how their brands appear across owned channels, large language models, traditional search and the wider web.”

With the acquisition, Adobe appears to be doubling down on its bid to transform into an AI-first company, a mission that has proven largely unsuccessful so far.

However, there are signs of a recovery on the horizon. The software maker raised its fiscal-year outlook in September, marking the second guidance raise this year, as it asserted that its investments in AI were beginning to bear fruit.

Based on language in the press release, the Semrush deal is an answer to the pain points all businesses, not just Adobe, have faced as they struggle to adapt to a world reshaped by generative AI.

Investors are skeptical for now. But if Adobe can help others stay afloat in an AI-centric world, maybe it can help itself too.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com