On Tuesday, Oppenheimer analysts led by Brian Schwartz downgraded Adobe to ‘‘Perform’’ from ‘‘Outperform’’ and withdrew their target, citing generative AI as a growing threat across application software. They highlighted that AI is accelerating content creation, compressing pricing and subscriber gains, and opening the door to competition from large language model providers and social platforms that now offer creative tools. Following the announcement, Adobe shares slid more than 5% in a single session, extending a 20% decline over the past year.

Industry surveys show over 50% of students and nearly half of freelancers now favor Canva’s design tools over Adobe’s suite, underscoring intensifying competition in the creative software market. Analysts warn that generative AI could undermine the traditional seat-based subscription model by enabling smaller teams to produce comparable work and making usage-based pricing — which charges per action rather than per user — increasingly attractive. A recent Deutsche Bank note cautioned that both factors could cap subscription growth and increase customer churn.

In the fourth quarter of fiscal 2025, Adobe reported non-GAAP earnings of $5.50 per share and total revenues of $6.194 billion, representing year-over-year gains of 14.3% and 10.5%, respectively, and beating consensus estimates. Despite the beat, Adobe’s stock has underperformed broader indices by roughly 3% since the release, following a downgrade from BMO Capital Markets that cited heightened competitive pressures and the risk of range-bound trading. Adobe’s market capitalization remains near $140 billion, with average daily trading volume around 3.3 million shares.