New York, January 5, 2026, 12:00 (EST) — Regular session
- Jefferies cut Adobe to Hold from Buy and lowered its price target to $400 from $500.
- Shares fell about 0.7% midday, underperforming broader software stocks.
- Investors now look to the March 12 earnings call for clearer AI-to-revenue traction.
Adobe shares fell on Monday after Jefferies downgraded the Photoshop maker to Hold and cut its price target. The stock was down 0.7% at $330.89 by midday in New York, after trading between $327.51 and $332.94. 1
The call lands as investors press Adobe for harder evidence that its AI features can add revenue, not just product usage. Jefferies pointed to rising competition in the lower end of Adobe’s market, where casual users have more AI-enabled alternatives to Creative Cloud subscriptions. 2
Jefferies’ software analyst Brent Thill urged clients to stay underweight software — meaning hold less than a benchmark allocation — until AI-driven growth is easier to measure, saying “’26 will be another year of gradual AI monetization.” He also flagged “AI disintermediation” concerns, shorthand for fears that new AI tools could reduce the need for traditional software seats. Jefferies upgraded IBM and kept Microsoft and Meta Platforms among its preferred mega-cap software names. 3
Adobe closed at $333.30 on Friday. 4
The downgrade left Adobe lagging a firmer software tape. The iShares Expanded Tech-Software Sector ETF was up 1.7%, while the Nasdaq-100 tracking Invesco QQQ ETF rose 1.1%.
In December, Adobe forecast fiscal 2026 revenue of $25.90 billion to $26.10 billion and adjusted earnings per share of $23.30 to $23.50, above Wall Street estimates, Reuters reported. CFO Dan Durn told Reuters that monthly active users of Adobe’s freemium products rose 35% from a year earlier to more than 70 million. 5
Jefferies is not the only firm to caution on near-term catalysts. KeyBanc cut Adobe to Underweight in mid-December with a $310 price target, while other firms adjusted targets but held more neutral-to-positive ratings, according to GuruFocus. 6
At around $331, Adobe is trading near the lower end of its 52-week range of $311.58 to $465.70. That puts the stock roughly 29% below its 52-week high, based on Investing.com data. 7
The risk for bulls is that AI-native tools keep pulling casual creators away, forcing Adobe to defend share through bundling and pricing. That could cap growth and keep valuation pressure on a stock already well off its highs.
The next catalyst is Adobe’s first-quarter fiscal 2026 earnings call on March 12. Investors will listen for signs that AI features are translating into net new annual recurring revenue — the subscription sales a company expects to collect over a year — and for any changes to full-year guidance. 8
