New York, Feb 4, 2026, 13:49 EST — Regular session
- After a tough week for software stocks, Adobe shares climbed roughly 3% in afternoon trading
- Valuations across the sector have come under pressure amid a new surge of AI disruption concerns
- Traders are turning their attention to Big Tech earnings and Adobe’s March results for fresh insights
Adobe shares climbed roughly 2.9% on Wednesday, adding $7.86 to reach $279.79 in afternoon trading.
The rebound followed a steep selloff in software shares that began to ease as investors questioned if new AI tools would actually cut into demand for traditional software. Nvidia CEO Jensen Huang dismissed the notion that AI will replace software tools as “illogical,” sparking debate across global markets. (Reuters)
The concern cuts to the heart of the sector’s fundamentals: subscription growth and the premium investors assign to it. “If you’ve got legacy software that’s old and clunky, you’re a ripe target for AI,” said Josh Chastant, portfolio manager at GuideStone Funds. U.S. markets digested this software sell-off amid new earnings reports and a chip decline led by AMD. (Reuters)
Adobe took a hit from Wall Street on Tuesday when Piper Sandler downgraded the stock to “Neutral” from “Overweight.” The firm also slashed its price target sharply, from $470 down to $330, pointing to worries over the company’s valuation multiple amid a changing software market. (TipRanks)
Investors remain divided on whether the sell-off has gone too far. The S&P 500 software and services index dropped nearly 4% Tuesday and slid further Wednesday, sinking about 13% over five sessions, Reuters reported. The sell-off followed the introduction of a new legal tool linked to Anthropic’s Claude model, which rattled confidence at the “application layer” of software. “We are not yet at the point where AI agents will destroy software companies,” said Ben Barringer, head of technology research at Quilter Cheviot. (Reuters)
Adobe’s reach is wide: it offers subscriptions for creative and document tools, serving everyone from individual designers to big corporations relying on Creative Cloud and Acrobat. The term “seat” pressure crops up when companies buy fewer user licenses, which can drag down both renewals and fresh sales.
The company is ramping up its generative AI efforts, embedding Firefly features within Creative Cloud to protect pricing power and unlock fresh revenue avenues. (Reuters)
The near-term outlook is complicated. Should customers settle for AI-native products as “good enough” for everyday tasks—or opt to develop their own tools—the result could be slower growth and more aggressive price cuts, even if Adobe retains its major enterprise clients.
Traders remain alert to whether volatility in the sector will weigh on broader tech sentiment through week’s end. Another sharp drop in high-growth software stocks could quickly turn today’s rebound into just a brief pause.
Adobe’s set to report Q1 FY2026 results on March 12. Investors will zero in on demand patterns, pricing strategies, and the impact AI is having—whether it’s boosting or cutting into the core business. (Adobe)
