Analyst firm Jefferies reduced its recommendation on Adobe from Buy to Hold and lowered its 12-month price target by 20% to $400 from $500, citing intensifying competition in artificial intelligence tools and a projected shift to ‘gradual’ AI monetization not materializing until 2026. The move reflects growing skepticism over the pace at which Adobe can convert AI innovation into incremental revenue against rival offerings from major cloud and software providers.

Adobe shares are headed for a fifth weekly decline after slipping nearly 5% last Friday, approaching a three-year trough first reached in late November. The stock has repeatedly struggled to clear its 180-day moving average near the $360 level and is now more than 23% below its year-ago value. Technical indicators underscore the weakness: the 14-day relative strength index sits at 24.6, firmly in oversold territory, suggesting limited short-term buying interest unless fundamental drivers improve.

Following Jefferies’ downgrade, Miracle Mile Advisors reduced its position by 56.7% in Q3, selling 3,961 shares and ending the period with 3,021 shares valued at roughly $1.07 million. In contrast, Norges Bank initiated a new stake valued at just over $2 billion, while Assenagon Asset Management expanded its holdings by 308%, accumulating more than 3.1 million shares worth approximately $1.2 billion. These moves highlight divergent views among large investors on Adobe’s medium-term growth prospects.

In its latest quarter Adobe reported revenue of $6.19 billion, up 10.5% year-over-year, and delivered earnings per share of $5.50, beating consensus by $0.10. The company achieved a 30% net margin and returned 61.3% on equity. For the first quarter of fiscal 2026, management guided to EPS between $5.85 and $5.90 and full-year EPS of $23.30 to $23.50, signaling confidence in continued revenue growth even as AI investments weigh on near-term profitability.