Jan. 9 at 8:14 PM
Adobe shares dropped 1.6% BMO Capital Markets downgraded the stock to Market Perform from Outperform, lowering the price target to
$375. The downgrade reflects rising competition in the creative software market, particularly from AI-powered alternatives targeting small businesses, students, and freelancers. Competitors like Canva and Alphabet’s AI offerings are intensifying the pressure on Adobe to retain and attract users.
Adobe continues to expand its AI capabilities, integrating tools like Photoshop, Express, and Acrobat into ChatGPT, and reporting that AI-influenced revenue now accounts for over a third of its annual recurring revenue. Despite these efforts, BMO notes a lack of near-term positive catalysts and expects the stock to remain range-bound. Adobe trades at 14x forward earnings, well below its five-year average of 28.1x, suggesting valuation is attractive but competitive risks remain.
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