Adobe (ADBE.US) faces strongest bearish wave in history: concerns over AI disruption intensify, record number of sell ratings

According to Jinse Finance APP, as the market increasingly worries about Adobe (ADBE.US) maintaining its competitiveness in the AI era, analysts’ views on this creative software giant have reached historic lows. This week, two institutions downgraded Adobe's rating, joining the growing ranks of skeptics. They fear that AI companies' products will erode demand for software like Photoshop, weakening Adobe’s long-term growth potential.

Analysts Shift En Masse: Sell Ratings Hit Historic High

The first downgrade this week came from Wells Fargo Securities. On Monday, the institution cut Adobe’s rating by two levels from “overweight” to “underweight,” and slashed the 12-month target price from $270 to $225. This brings Adobe's total sell ratings to seven, an all-time high, whereas mid-2025 saw zero sell ratings.

Michael Turrin, an analyst at Wells Fargo Securities, wrote: “More pronounced cracks are starting to appear in Adobe’s growth trajectory.” He was referring to Adobe’s third-quarter results released last month, which he described as “rather lackluster.” He also noted that, given management’s recent comments about delaying price increases for core creative products, Adobe’s ability to achieve its full-year targets now looks “challenging.”

On Tuesday, HSBC analyst Stephen Bersey lowered Adobe’s rating from “buy” to “hold,” cutting the target price from $310 to $267, and called Adobe “a real candidate for AI-driven disruption.”

Since the start of the year, analysts have downgraded Adobe stock at least 15 times, including two downgrades this week. As a result, Adobe’s recommendation consensus indicator—a proxy for the ratio of buy, hold, and sell ratings—has dropped to 3.16 on a 5-point scale, marking a historic low. By comparison, the average consensus rating for S&P 500 software index components stands at 4.65, indicating much stronger bullish sentiment.

Stock Price Plummets Third Year in a Row, Viewed as an AI Disruption Benchmark

Concerns about AI disruption have dominated software investors’ attention this year. At the start of 2026, the software sector plummeted as AI-native companies like OpenAI and Anthropic continued to launch new products. While investor sentiment for some software has largely recovered, believing they are hard to replace, Adobe remains a significant exception.

So far this year, Adobe’s share price has fallen nearly 30%, while the iShares Expanded Tech-Software Sector ETF has risen 3.7% over the same period. This ETF is widely seen as a proxy for the software sector. Adobe’s stock may decline more than 20% for a third consecutive year, and this prolonged sell-off reflects that the market views Adobe as a typical case of AI disruption.

Investors worry that users may abandon their Photoshop subscriptions and opt for tools from companies like OpenAI or Anthropic to generate images via prompts. Although Adobe also offers its own AI functionalities, the market fears that AI competition will suppress its pricing power and drag down profit margins.

This concern is central to HSBC’s rating downgrade. Bersey believes the competition comes from “Adobe clone software built on AI prompt engineering.” He cited media reports that a company called ArtCraft offers free versions of comparable products, including versions of Photoshop, Illustrator, Premiere, Lightroom, Acrobat, After Effects, and InDesign.

Bersey wrote that such competition “poses a negative news risk for Adobe,” though he believes these services also carry risks for users.

On the whole, Adobe is facing multiple pressures from analyst sentiment, share price performance, and AI competition worries. The market is focused on whether this creative software giant can defend the moat around its core products in the AI era.