Everbright Securities Warns that Under Increased Competition from AI, Adobe (ADBE.US) Growth May Face Continued Pressure, Downgrades Its Rating and Target Price.

Due to concerns over growth prospects and competition, Adobe's (ADBE.US) stock price fell on Monday, following a downgrade in rating and target price by analysts at Mizuho, who warned that growth for the company may continue to be under pressure amidst intensifying competition in the field of artificial intelligence. Mizuho analyst Gregg Moskowitz downgraded Adobe's rating from "outperform" to "neutral" and lowered the target price from $315 to $270. As a result, Adobe's stock price dropped 2.5% on Monday to $239.31. The stock has experienced a cumulative decline of 31% since the beginning of the year. In his report, Moskowitz pointed out that despite Adobe's ongoing expansion of AI capabilities and exploration of more commercial opportunities, there are still risks. Particularly, the business levels targeting consumers and small-to-medium enterprises, which are expected to account for over 65% of the company's Annual Recurring Revenue (ARR), are facing increasing competition from AI-native platforms and low-cost design tools. Market concerns arise as generative AI capabilities rapidly advance, leading to the potential replacement of some traditional software functionalities in the future, which is challenging investors' valuation logic for software companies. As a leader in creative software, Adobe is facing dual competition from emerging AI platforms and traditional tech giants. Analysts noted that in addition to AI-native competitors, technology companies such as Apple are also launching their own creative software, further intensifying industry competition pressure. To alleviate market doubts, Adobe launched the AI-powered platform CX Enterprise last week, aiming to help businesses improve sales, optimize customer experience, and accelerate time-consuming tasks. Following the announcement, the company's stock price briefly rose by 1.7%. However, Mizuho believes that such new products are still not enough in the short term to fully offset the competitive pressures faced by the core business. Moskowitz pointed out that although AI-enhanced capabilities are expected to bring long-term monetization opportunities, the competitive landscape is becoming more complex in the consumer and small-to-medium enterprise markets. Market participants believe that the core issue facing Adobe currently lies not only in slowing growth but also in investors reassessing the moat of traditional software companies in the age of AI. If the company fails to demonstrate that its AI strategy is sufficient to drive a new growth curve, its valuation may continue to be under pressure. However, some experts believe that with its core product ecosystem including Photoshop and Lightroom, as well as a large user base, Adobe still possesses strong competitive resilience. The key lies in whether the company can accelerate the commercialization of its AI capabilities.