Adobe (ADBE) was downgraded to Hold from Buy by Jefferies as the financial firm has not yet observed any notable catalysts from artificial intelligence.
Shares had inched down 1% by late morning Monday market action. The creative software company has declined by more than 20% over the past year.
“Adobe has made significant progress with Al features since Firefly was announced in early 2023,” said Jefferies analysts, led by Brent Thill, in an investor note. “In FQ3, gen Al credit consumption increased 3x q/q, and Al-influenced ARR exceeded one-third of overall business.”
However, Jefferies said it has not noted any revenue contribution boost from Adobe’s AI tools, including its full-year 2026 initial guidance.
“While heavy Al users must sign up for paid subs plans, ADBE has often run promotions for unlimited usage over the past year or more, implying a continued focus on adoption over monetization in the midst of increasing competition,” Thill added. “We do not see acceleration in total revs during our forecast period to FY30.”
Last month, KeyBanc downgraded Adobe to Underweight from Sector Weight due in part to rising competition in the AI software space.
“Content generation models being developed by Alphabet (GOOG)(GOOGL), Meta (META), or OpenAI (OPENAI) are landing on digital real estate that those companies either own today or, in the case of OpenAI, may own in the future,” KeyBanc noted. “We believe this two-front defense, along with the traditional competitors like Figma (FIG) and Canva, will make 2026 another year when fundamental upside from AI is difficult to come by.”