Core Insights - The S&P 500 has increased by 68% since the launch of OpenAI's ChatGPT in November 2022, primarily driven by gains in big tech stocks, while companies like McDonald's and Starbucks have also benefited from AI-driven productivity expectations [1] - Adobe has faced significant challenges, with its shares down 21% due to fears that AI content-creation technologies may render its services obsolete [2] - Despite the negative sentiment, Adobe reported record revenue of $19.41 billion for the fiscal year following ChatGPT's debut, with a 17% year-over-year earnings growth [5] Financial Performance - Adobe's revenue and net income have shown consistent growth over the past few fiscal years, with revenue increasing from $17.61 billion in 2022 to $23.77 billion in 2025, representing an 11% year-over-year growth in 2025 [6][7] - Net income rose from $4.76 billion in 2022 to $7.13 billion in 2025, indicating strong financial health despite market challenges [6][7] - Earnings per share (EPS) increased from $10.10 in 2022 to $16.70 in 2025, reflecting the company's ability to enhance shareholder value [7] Market Sentiment - There is a rising short interest in Adobe's stock, reaching an eight-year high, indicating growing pessimism among investors [4] - The media has raised concerns about Adobe's future, with some questioning whether it is a "falling knife" [3] - Despite bearish sentiment, there are arguments suggesting that the current market outlook may overlook Adobe's strong fundamentals and growth potential [4]

Adobe Inc. (NASDAQ:ADBE) is one of the 10 Best AI Software Stocks to Buy Right Now. On January 26, UBS reduced its price target on Adobe Inc. (NASDAQ:ADBE) from $375 to $340 and maintained its Neutral rating on the stock. On January 14, Baird also lowered its price target on Adobe Inc. (NASDAQ:ADBE) from $410 to $350 and kept a Neutral rating on the stock. UBS, Baird Lower PT on Adobe (ADBE), BMO Capital Downgrades to Market Perform Photo by Jakob Owens on Unsplash Earlier, on January 9, BMO Capital do ...

Core Viewpoint - Adobe has announced the discontinuation of Adobe Animate, a 2D animation software that has been in use for over 25 years, primarily due to a shift in focus towards AI technologies [10][38]. Group 1: Announcement and User Reactions - Adobe officially notified users that sales of Adobe Animate will cease on March 1, 2026, with varying support timelines for enterprise and individual users [10][19]. - The announcement has led to widespread disbelief and frustration among users, particularly those who have invested time in learning the software [3][5]. - Many users feel abandoned, citing a lack of communication and a suitable alternative from Adobe [28][29]. Group 2: Impact on Users and Industry - Despite its decline, Adobe Animate remains essential for many web animators, game developers, and content creators, with some users stating it is irreplaceable [11][13]. - The transition to alternative software, such as Toon Boom, is complicated by high migration costs and the need to relearn workflows [16][17]. - Users express concerns that Adobe's decision will negatively impact their work quality and existing projects [12][46]. Group 3: Adobe's Strategic Shift - Adobe's rationale for discontinuing Animate centers around the advancement of technology and a strategic pivot towards AI-driven tools [37][38]. - The company has been focusing on integrating AI features across its applications, which has led to the neglect of Animate [39][41]. - Critics argue that the decision to shut down Animate reflects a broader trend of prioritizing new technologies over established products, even when those products still have a dedicated user base [44][46]. Group 4: Historical Context and Legacy - Adobe Animate, originally launched as FutureSplash Animator in 1996, played a significant role in transforming the internet by enabling rich multimedia content [48][50]. - At its peak, Flash Player was installed on over 98% of computers, making it a cornerstone of web animation and independent game development [52][54]. - Despite its historical significance, Animate has struggled to adapt to modern demands, leading to its eventual phase-out [62][67].

Group 1: Company Overview - Adobe is a legacy creative software giant known for products like Photoshop, Illustrator, and Premiere, primarily selling bundled Creative Cloud subscriptions across various creative services [3] - Figma, in contrast, is a browser-based design and prototyping tool focused on real-time collaboration, competing mainly with Adobe XD, and has gained popularity among design teams, especially in startups and tech companies [4] Group 2: Financial Comparison - Adobe's trailing twelve months (TTM) revenue stands at $23.8 billion with a year-over-year growth of 11%, while Figma's TTM revenue is $1.0 billion with a much higher growth rate of 38% [7] - Adobe's TTM net income is $7.1 billion, whereas Figma reports a net loss of $0.9 billion [7] - Free cash flow for Adobe is $9.9 billion compared to Figma's $0.3 billion, indicating Adobe's strong cash generation capabilities [7] - Adobe's price-to-earnings ratio is 17.6, while Figma does not have a P/E ratio due to its net loss; however, Figma's price-to-sales ratio is significantly higher at 13.6 compared to Adobe's 5.1 [7][8]

Core Viewpoint - Adobe's stock has experienced a 14% decline at the start of 2026, but the company is showing resilience against the pressures of generative AI and is seeing strong momentum in its own AI products, making it a potential buy for investors [2]. Company Performance - Adobe's Creative Cloud remains the industry standard for creative professionals, with high switching costs for users who have mastered its tools, making it less susceptible to competition from AI services [4]. - The company has launched Adobe Express, a freemium cloud-based service, to attract amateurs and novices, while also integrating its generative AI software, Firefly, into this platform [5]. - Annual recurring revenue (ARR) grew by 11.5% year over year in 2025, reaching $25.2 billion, with AI-influenced ARR accounting for over one-third of its overall business [6]. - Remaining performance obligations increased by 13% from the end of 2024, reaching $22.5 billion, indicating strong future growth potential [7]. - Adobe's financial results show no negative impact from competing AI tools, and the company is benefiting from integrating generative AI features into its software [8]. Valuation - Adobe's stock is currently trading at 13 times forward earnings expectations, presenting a significant buying opportunity due to its low valuation and strong growth prospects [8].

Summary of Global Software Conference Call Industry Overview - The software industry is experiencing a significant shift in focus from macroeconomic concerns to the disruptive rise of AI, with investor discussions centered around whether an AI bubble exists and the potential impact of AI on enterprise software [1][11][15]. Key Themes for 2026 - **Valuation Reset**: Software valuations have halved over the past year, creating opportunities to acquire high-quality stocks at discounted prices [14][31]. - **IT Spending Outlook**: Recent CIO surveys indicate one of the strongest IT spending outlooks since 2018, with expectations for a stable macro environment and lower interest rates supporting demand, particularly among small and medium-sized businesses (SMBs) [3][13][23]. - **Generative AI Impact**: While Generative AI is a major topic, its revenue impact on most software companies is still limited. The expectation is that significant revenue generation from AI will not materialize until 2027 or later [6][19][22]. Company-Specific Insights - **Top Picks**: Recommended stocks include Oracle, Microsoft, SAP, and HubSpot, all rated as Outperform. MongoDB is also favored for its long-term potential and near-term momentum [4][7][25][26]. - **Cautionary Stocks**: Salesforce is expected to underperform due to concerns over AI disruption and market saturation. Snowflake is rated as Market-Perform, with long-term growth prospects viewed as uncertain [4][7][29][30]. Financial Metrics - **Valuation Comparisons**: - Adobe (ADBE): Current price $296.12, target $506.00, adjusted P/E 12.0 for 2026E. - Microsoft (MSFT): Current price $459.86, target $645.00, adjusted P/E 27.5 for 2026E. - Oracle (ORCL): Current price $191.09, target $339.00, adjusted P/E 25.9 for 2026E. - Salesforce (CRM): Current price $227.11, target $223.00, adjusted P/E 19.2 for 2026E [5][8]. Investment Implications - **SMB vs. Enterprise**: SMB-focused software companies may see earlier revenue recovery compared to enterprise-focused firms, as SMBs typically rebound faster in improving economic conditions [6][23]. - **AI Revenue Generation**: The expectation is that while AI will contribute to revenue growth, it will be limited in 2026, with only a few companies likely to see a significant positive impact [19][20]. Macro Considerations - **Economic Stability**: The macroeconomic environment is expected to remain stable, with potential benefits from deregulation and tax cuts in the U.S. [3][23]. - **Geopolitical Risks**: Ongoing global conflicts and geopolitical tensions may continue to impact market sentiment and investment strategies [21][23]. Conclusion - The software sector is at a pivotal moment, with significant opportunities arising from valuation resets and a favorable IT spending outlook. However, the impact of Generative AI remains uncertain, and investors are advised to focus on company-specific fundamentals while being cautious of potential disruptions in the market.

We recently published 15 Stocks on Jim Cramer’s Radar.  Adobe Inc. (NASDAQ:ADBE) is one of the stocks on Jim Cramer's radar. Adobe Inc. (NASDAQ:ADBE) is another software firm that has struggled in the age of AI. Its shares are down by 33% over the past year and by 12.5% year-to-date. January has seen several analysts share their thoughts on Adobe Inc. (NASDAQ:ADBE). Jefferies cut the share price target to $400 from $500 and reduced the rating to Hold from Buy. The financial firm discussed Adobe Inc. (NASDA ...

ANKARA, TURKIYE - DECEMBER 24: In this photo illustration the Adobe Firefly logo is displayed on a mobile phone screen in front of Adobe logo, on December 24, 2025. (Photo by Abdullah Guclu/Anadolu via Getty Images)Anadolu via Getty ImagesWe believe Adobe (ADBE) stock may represent a good value buy. It is presently trading at a lower than average valuation, coupled with reasonable revenue growth and strong margins that align with its modest valuation.Purchasing stocks that have low valuations or are trading ...

Adobe Inc. (NASDAQ:ADBE) is one of the 10 Goldman Sachs undervalued stocks to invest in. Broader Analyst Sentiment Bullish on Adobe (ADBE) Amid Longer-Term Franchise Strength Adobe, software As of January 16, 2026, investor sentiment surrounding Adobe Inc. (NASDAQ:ADBE) remains cautiously constructive. Roughly 60% of analysts maintain their bullish tones with a consensus price target of $417.50, implying 37.30% upside. However, investor debate is growing around the company’s short-term catalysts and lon ...

Its stock has struggled, down 17% year-to-date (YTD), underperforming the S&P 500's 0.25% gain, and also 38% below its 52-week high of $465.70, reflecting the market's pessimism. Valuation metrics show Adobe trading at a trailing price-to-earnings (PE) ratio of 17.7, well below its three-year historical average of 38.2 and the technology sector average of 32. This suggests the market sees less growth potential.Adobe is a leading software company specializing in creative and digital experience tools, includi ...