"As The Street reported last week, Morgan Stanley recently cut its price target on the tech giant, warning that major competitors, including graphic design platforms Figma and Canva, could soon come for its lunch by leapfrogging the 42-year-old software giant with AI tech. Those challengers have drawn tens and hundreds of millions of monthly users, respectively, luring them in with AI agent integrations and other so-called "Magic" features."
"Morgan Stanley slashed its price target for the software giant, warning that Adobe has yet to meaningfully monetize its approach to the much-hyped tech. In a note last week, the investment bank's top analyst, Keith Weiss, warned that "there is relative uncertainty in a sizable portion of the Adobe [annual recurring revenue] base where we lack confidence in Gen AI advancements being a net positive.""
"However, its annual recurring revenue has been flagging, Morgan Stanley warned, indicating that its AI push may not buoy up enough excitement alone. Last month, Melius Research analyst Ben Reitzes had also cut his price target for Adobe, warning that the "world is coming around to the reality that 'AI is eating software.'" There are also broader concerns that the enthusiasm surrounding the tech could start bottoming out, in a bursting of the AI bubble that analysts have been warning about for quite some time."
Morgan Stanley cut its price target on Adobe, warning that competitors such as Figma and Canva could leapfrog the 42-year-old company using generative AI features that attract tens to hundreds of millions of monthly users. Adobe has rolled out AI integrations across its app suite, but analysts question the company's ability to monetize those tools and sustain annual recurring revenue. Adobe's stock is down just over 18% year-to-date despite beating third-quarter estimates. Melius Research also trimmed its target, framing the trend as 'AI is eating software.' Massive investments in generative AI raise concerns about profitability and a potential AI bubble.
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