Adobe shares are under pressure today, despite the company recently delivering strong quarterly results and lifting forward guidance. The drop isn’t being driven by earnings or macro factors, but by a deepening sense of uncertainty surrounding the company’s ability to maintain its edge in an industry undergoing radical transformation due to generative AI. At the heart of this selloff is a mounting skepticism that Adobe’s traditional creative dominance—anchored in tools like Photoshop, Illustrator, and Premiere—can hold in a world where ideation and production are increasingly automated, democratized, and outsourced to newer, often more agile platforms.
While Adobe did post impressive numbers—revenue growth, increased earnings per share, and raised expectations for the next quarter—investors appear less interested in past performance and more focused on where the future growth will come from. AI-native content generation tools from both tech giants and niche startups are rapidly eating into the early phases of the creative pipeline. Adobe’s competitors, including those offering free or low-cost AI image and video generators, are gaining traction fast. Some of these tools now offer faster turnaround, simpler interfaces, and results that rival professional output—challenging Adobe’s core proposition and pricing structure.
This pressure comes at a delicate time for the company. Adobe’s efforts to bolster its AI credentials with Firefly and GenStudio are promising, but they are still maturing. Market participants are clearly asking whether these tools will generate enough adoption and monetization to offset the rise of disruptive alternatives. There’s also lingering sentiment over the abandoned $20 billion acquisition of Figma, once seen as Adobe’s ticket to owning the collaborative UI/UX space. Now that the deal is dead and Figma plans to go public, Adobe is left without a vital strategic advantage—and is instead facing renewed competition from a rival that has only grown stronger in the meantime.
The downgrade by a major analyst firm earlier today crystallized these concerns, triggering a wave of selling. The downgrade didn’t just cut the price target, it cast doubt on Adobe’s ability to hold its premium valuation in a market that increasingly values disruptive innovation over legacy brand power. The broader takeaway is that investors, even those impressed by Adobe’s execution, are growing impatient. They’re not just asking whether Adobe can keep up with the AI revolution—they’re beginning to ask if it’s already fallen behind.
For Adobe, this moment may be less about missing a quarter and more about needing to redefine its place in the creative economy before others finish the job for it.