Adobe (ADBE) is facing renewed pressure from Wall Street analysts amid doubts about its ability to stay competitive in the AI era. Wedbush analyst Daniel Ives delivered the most notable blow by removing Adobe from his widely followed AI 30 list, signaling concern over its role in a market increasingly shaped by AI tools. Adding to the bearish tone, Melius Research’s Ben Reitzes downgraded the stock to Sell with a $310 price target, implying a 14% downside from current levels. Reitzes argues that investors may find better opportunities in “infrastructure winners” such as Microsoft (MSFT) and Oracle (ORCL).
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However, on the other side of the spectrum, we find Goldman Sachs and Morgan Stanley, which remain positive with a Buy rating and bullish price targets of $570 and $510, respectively. In the meantime, Adobe’s stock is down more than 18% year-to-date, but it rose 2.45% on Friday.
Strong Results, Mixed Views on AI Plans
It’s clear that Adobe’s AI strategy divides opinions among The Street’s analysts. New features such as Firefly AI and Acrobat Studio aim to keep users within the platform, and Adobe launched standalone Firefly plans starting at $9.99 per month. Yet some worry that free or lower-cost AI tools could challenge the subscription model. Copyright concerns and slower-than-expected monetization for AI features add to the uncertainty.
Financial results remain strong. Adobe reported $5.87 billion in revenue for the second quarter, up 11% from a year earlier. Earnings also beat estimates, and the company lifted its full-year revenue forecast to between $23.5 billion and $23.6 billion. Growth was supported by gains in Digital Media, with annual recurring revenue reaching $18.09 billion. The company also highlighted a strong cash flow of $2.19 billion. For now, Adobe holds a strong position in creative software, but the next stage of growth depends on how well its AI plans deliver value.
Is Adobe Stock a Buy, Sell, or Hold?
Despite mixed views, Adobe holds a Moderate Buy consensus across 29 analyst ratings. The average ADBE stock price target stands at $479.46, implying a 33.14% upside from the current price.
