Oracle (ORCL) and Adobe (ADBE) were in focus on Tuesday as investment firm BNP Paribas weighed in on the recent sell-off in enterprise software stocks.
For Adobe, the company realizes its shares are under “AI disruption fear-related pressure,” and it’s likely that the San Jose-based company understands it needs to quell those fears, via stabilization, then acceleration. However, that may not happen soon, analyst Stefan Slowinski said.
“With new users now having the ability to start with free products (now 70M free MAUs, and growing fast), monetization of customers may take longer than in the past,” Slowinski wrote in a note to clients. “While Adobe remains confident in the value its products can deliver (user and usage growth remains reassuring – backed by the guidance for at least flat NNARR growth this year), it may take time for the model to deliver reacceleration. In addition, positioning Adobe as an aggregator of models for creatives will also take time to develop.”
However, the company is set to hold its Adobe Summit in April, where Slowinski said the messaging may focus on its “AI influenced” product data rather than “AI first.” New AI drivers this year could be a shift toward 3rd party model usage; demand for higher resolution; and more video consumption, which will in turn drive more credit consumption, Slowinski explained.
Oracle
For Oracle, the issue is around its balance sheet, given that the company recently announced its capital plan for 2026, which includes raising up to $50B in debt and equity.
“While we believe the debt issuance was largely expected by the market, the equity issuance was somewhat of a surprise, as the market focus on financing discussions since the investor day in October was on the credit side,” Slowinski explained. “We believe that the debt market pressures on software companies, including Oracle, likely led to the equity issuance. Given the initial market reaction, we believe the fund raising has calmed some nerves.”
Slowinski added that he does not believe there will be vendor financing and that Oracle continues to suggest it does not need any more than the $100B in financing it referred to in its last results.
“Overall, we believe that Oracle remains confident in delivering on its 2030 targets.,” Slowinski added. “Datacenter build and delivery targets are on track, and financing is in place. While there may be more contracts that need to be won over the next few years and added to the backlog from here in order to meet 2030 top and bottom line targets, Oracle expects more orders from existing AI customers to come through as the AI arms race continues.”