Wall Street analysts largely had positive views after attending Adobe’s (ADBE) MAX event, but some did note that an “AI existential threat may continue to weigh on the stock” in the near term.
Shares of Adobe fell about 6% on Wednesday.
Piper Sandler maintained its Overweight rating and $470 price target on Adobe’s stock.
“We were encouraged by the rapid pace of innovation on display at Adobe MAX in Los Angeles, but acknowledge the AI existential threat may continue to weigh on the stock near term, especially given AI adoption and monetization remain in the early innings,” said analysts led by Hannah Rudoff.
The analysts noted that the robust product innovation pipeline and open ecosystem, coupled with enforcement of generative credit limits (which recently started), could position Adobe as a better business a year from now. The addition of total annual recurring revenue, or ARR, as a new key performance indicator, or KPI, to anchor investors could help bring clarity to the story over the coming quarters, according to the analysts.
Stifel kept its Buy rating and $480 price target on Adobe.
Analysts led by J. Parker Lane said that based on their experience at MAX and recent customer conversations, GenAI adoption in the creative space is much further along than other industries.
With that, GenAI advancements dominated the longer-than normal, three-hour MAX keynote and following investor session. More specifically than “genAI”, a key focus area of the event was third party models and partnerships. By hosting the majority of state-of-the-art genAI models natively, and simultaneously developing its own Firefly models, Adobe continues to solidify itself as the Creative OS for the coming years, the analysts added.
“The waters ahead remain muddy as forward-looking fears around seat counts in creative departments and competition are difficult to disprove, but we see Adobe actively improving its competitive positioning through web and mobile developments and expect the company’s positioning as the creative system of record for businesses to remain durable,” said Lane and his team.
RBC Capital Markets maintained its Outperform rating on Adobe with a $430 price target.
“We had the opportunity to attend Adobe Max and came away impressed with the strategic focus on establishing a broader ecosystem for content creation and distribution. Expanded partnerships, embedding additional models, workflow automation and AI assistants all seem well suited for enterprises to both create and capture value through generative design,” said analyst Matthew Swanson and his team.
The analysts noted that Adobe highlighted new products and partnerships around its Creative Cloud suite. From an investor standpoint, the analysts believe partnerships were the most material positives including embedded models and expanded partnerships with Alphabet’s (GOOG) (GOOGL) Google and OpenAI (OPENAI) showing demos of integrations for both YouTube and ChatGPT.
In terms of financials, the company reiterated both fourth quarter and fiscal year 2025 guidance. While no numbers were given, management did lay out the metrics they will report and guide to in fiscal 2026, including total Adobe ARR which will be guided to annually.
Swanson and his team added that while not quantifying momentum, Adobe’s management noted that they are seeing seat expansion as well as an “explosion” of content creation.
“Overall, we viewed the event as a step forward in articulating the long-term strategy around generative AI which is increasingly focused around providing an ecosystem and a consistent digital record for creative content regardless where it is created,” said the analysts.
Citizens has a Market Perform rating with no price target on Adobe’s stock.