Adobe stock slides as AI competition dents growth outlook

Adobe has seen a sharp drop in analyst sentiment, with Wall Street’s consensus at its most bearish since 2013 as AI competition intensifies.

Shares in the software maker, known for products like Photoshop and Illustrator, fell up to 2.6% on January 13 and are down 6.4% in 2026, after declines of more than 20% in both 2024 and 2025.

Oppenheimer downgraded Adobe’s stock to “perform,” citing risks from a challenging AI transition, slowing revenue growth, and increased competition from companies including OpenAI.

Since the end of 2023, Adobe’s stock has fallen over 45%, while software and tech indexes have risen.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Adobe AI use grows while margins and guidance lag

AI now touches one third of Adobe’s book of business (existing customer subscriptions and contracts) with Annual Recurring Revenue at $25.2 billion 1. A third-party analysis pegs AI-direct ARR above $250 million for FY 2025 2, under 1% of total ARR.
Generative credit consumption (the tokens customers spend to run AI features) tripled in Q4 1. Adobe still guides to 10.2% ARR growth in FY 2026 versus 11.5% in FY 2025 1. Paid conversions and Average Revenue Per User (ARPU) have seen limited lift.
Adobe targets about 45% non-GAAP (excluding certain accounting items under Generally Accepted Accounting Principles) operating margin in FY 2026 1 while it spends on AI.

Migration tools and procurement advisory offer near-term revenue

Many enterprises are reassessing Adobe as rivals gain ground 2. Examples include Figma (a browser-based design and prototyping tool) and Affinity (Serif’s professional design software suite). That is driving demand for migration tools that move Creative Cloud assets, workflows, and team permissions to other platforms.
Firefly Foundry (an enterprise service to customize and operationalize Adobe’s generative AI models) earns money through managed services, with a media customer adding $7 million on top of $10 million existing creative ARR 3. Specialized consultancies can replicate this approach for mid-market firms that lack in-house AI skills.
Adobe plans to buy Semrush (a search and marketing analytics software company) for $1.9 billion 3. Integration specialists can wire Semrush SEO data into Adobe GenStudio or rival marketing platforms for visibility across search engines and Large Language Models (LLMs).