Adobe (ADBE.US) AI Story Goes Bad, Jefferies Downgrades Rating to “Hold”: Promotions Are Hard to Exchange Profit, or Hard to Boost Growth Before 2030

The Zhitong Finance App learned that Jefferies published a research report downgrading the Adobe (ADBE.US) rating from “buy” to “hold” because the agency has yet to observe that the artificial intelligence (AI) business has brought any significant growth impetus to the company.

The Jefferies analyst team, led by Brent Thill, stated in an investor report: “Since launching the Firefly generative AI tool in early 2023, Adobe has made significant progress in developing AI features. In the third fiscal quarter, credit usage for its generative AI services doubled month-on-month, and AI-driven annual recurring revenue (ARR) accounted for more than one-third of the company's overall business.”

However, Jefferies also stressed that it has not yet observed that Adobe's AI tools have a clear impact on revenue, and the company's preliminary guidance for FY2026 did not reflect this.

Thill further added, “Although heavy AI users are required to subscribe to a paid plan, Adobe has frequently launched unlimited usage promotions over the past year or so. This shows that in an environment of increased competition, the company is still focusing on promoting use rather than making a profit. We expect Adobe's total revenue growth to show no significant signs of accelerating during the fiscal year 2030 forecast period.”

Notably, last month, KeyBanc also downgraded Adobe's rating from “equal to the market” to “reduced holdings”, partly because competitive pressure in the AI software field continues to increase.

KeyBanc's analysis stated, “Companies such as Google (GOOGL.US), Meta (META.US), and OpenAI are vigorously developing content generation models. The application scenarios covered by these models are either the market fields currently occupied by the above companies, or (taking OpenAI as an example) a track where their future is likely to be laid out. We believe that in the face of dual competition from tech giants and emerging companies, and the clash of traditional competitors such as Figma (FIG.US) and Canva, it will still be difficult for Adobe to use the AI business to achieve substantial improvements in fundamentals in 2026.”

By Monday's close, the creative software giant's stock price had fallen by more than 20% cumulatively over the past year.