Adobe (ADBE) shares have dropped over 23% so far this year, and one Wall Street analyst believes the pressure is far from over. Melius Research Top analyst Ben Reitzes has cut his rating on Adobe from Hold to Sell, setting a $310 price target. The four-star analyst warned that the rise of artificial intelligence is creating new challenges for traditional software companies like Adobe.
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Analyst Sees More Downside Ahead
Reitzes believes AI is disrupting the traditional software market. He said software-as-a-service (SaaS) companies, which sell software through online subscriptions, are now in a phase where their valuations could shrink. He compared this to the early 2000s, when the rise of Amazon Web Services (AWS) hurt hardware makers like Dell Technologies (DELL) and HP (HPQ).
He noted that leading SaaS companies such as Adobe, Atlassian (TEAM), and Salesforce (CRM) have all posted double-digit declines in 2025. Reitzes believes investors will shift more money toward infrastructure giants like Microsoft (MSFT) and Oracle (ORCL), which provide the core systems that power AI services.
Reitzes also cautioned that AI could make the competitive environment tougher for Adobe in the coming years. As a result, the analyst also lowered his earnings estimates for Adobe for 2026 and 2027. His $310 price target is based on about 13 times his forecast for fiscal 2027 earnings. The price target indicates a potential downside of about 9% from the current levels.
Is Adobe a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on Adobe stock based on 20 Buys, six Holds, and two Sells assigned in the last three months. The average Adobe price target of $485.08 implies about 42.23% upside potential from current levels.
