Analysts at Oppenheimer downgraded Adobe from Outperform to Perform and withdrew their price target, citing accelerated AI-driven content creation as a key threat to Adobe’s core Creative Cloud franchise. The firm highlighted that generative AI tools from providers such as OpenAI and Meta are enabling non-Adobe users to produce similar outputs at lower cost, putting pressure on subscriber growth. Adobe’s shares declined more than 5% on the day of the announcement, extending a year-long drop of over 20%.

Despite investor concerns, Adobe reported fourth-quarter fiscal 2025 non-GAAP earnings of $5.50 per share, a 14.3% year-over-year increase that beat consensus by 2%. Total revenues rose 10.5% to $6.194 billion, exceeding expectations by 1.5%. The results were driven by growth in Digital Media, where subscription revenue climbed double digits, as enterprises continued to adopt Adobe’s marketing and analytics solutions.

Adobe faces mounting competition from emerging creative platforms such as Canva, which recent surveys show is preferred by over half of students and nearly half of freelancers. Industry observers note that if usage-based pricing models popular with AI service providers become widespread, Adobe’s traditional seat-based subscription model could lose appeal. Meanwhile, BMO Capital Markets reduced its rating on Adobe from Outperform to Market Perform, citing a crowded market and potential range-bound stock performance.

About half of analysts tracking Adobe maintain Buy ratings, while the remainder are split between neutral and sell recommendations. The average price target implies upside potential of roughly 26% from current levels. Investors will be watching Adobe’s strategic investments in AI-powered features and potential shifts in pricing models to determine whether the company can defend its leadership in creative software and sustain revenue momentum in 2026.