Oppenheimer cuts Adobe to Perform, sees limit near-term upside

As previously reported, Oppenheimer analyst Brian Schwartz downgraded Adobe (ADBE) to Perform from Outperform. The firm had previously been bullish on Adobe as it expected its AI business momentum to reinvigorate growth in its Digital Media business. But this did not play out as Oppenheimer expected, and is visible with Digital Media growth decelerating further in FY25. In the firm’s view, Adobe has good medium-term opportunities and is a cheap stock. However, a challenging operating environment during the AI technology transition leading to uninspiring and decelerating top-line-growth, inconsistent execution with product cycles, durability concerns about the moat, lackluster investor interest for owning software names, and won year-over-year operating margin guidance in FY26 will likely weigh negatively on the sentiment for the company’s opportunities this year, and limit near-term upside for the shares.