Adobe Stock (ADBE) Under Pressure To Start Year, As Analyst Downgrades

Adobe Inc. (NASDAQ: ADBE) faces headwinds as multiple analyst downgrades reflect concerns about its growth trajectory and competitive positioning, impacting market sentiment and stock performance. The stock began 2026 on a negative note, declining 4.77% on the first trading day, and the downward pressure continues with recent analyst revisions.

Adobe's stock price sits at approximately $330 in the pre-market today, 22% lower over the past 12 months, significantly underperforming the technology sector and broader markets. This downturn is attributed to increased competition, most notably in the artificial intelligence (AI) space, and difficulties in monetizing new technologies effectively.

Jefferies Downgrade

Jefferies downgraded Adobe to ‘Hold' from ‘Buy' today, lowering the price target to $400 from $500. This action is part of a broader sector strategy for 2026, advising an underweight position in software due to expected slower growth compared to sectors like semiconductors. Jefferies anticipates gradual AI monetization in 2026, requiring substantial growth to alleviate market displacement concerns, favoring infrastructure over applications in the first half of the year, with an expected sentiment improvement for applications later in the year.

KeyBanc Downgrade

KeyBanc also downgraded Adobe on December 15, from ‘Sector Weight' to ‘Underweight,' setting a price target of $310. This decision followed Adobe's fiscal Q4 2025 results, which revealed guidance for flat net-new Annual Recurring Revenue (ARR) in 2026 and projected contraction in EBIT margins. KeyBanc's downgrade underscores concerns about Adobe's ability to sustain growth momentum amid intensifying competition and market saturation.

Morgan Stanley Downgrade

Morgan Stanley downgraded Adobe on September 24, from ‘Overweight' to ‘Equalweight,' reducing the price target to $450 from $520. The downgrade was attributed to Adobe's Digital Media ARR growth not keeping pace with the innovation in its product portfolio, specifically regarding generative AI functionalities. Morgan Stanley noted that direct monetization of AI has lagged initial expectations, with Adobe prioritizing widespread adoption before focusing on revenue generation.

Evercore ISI Outlook

Even Evercore ISI, while maintaining an ‘Outperform' rating, lowered its price target for Adobe on December 11, 2025, to $425 from $450 following Adobe's fiscal Q4 2025 results. Despite exceeding expectations in revenue, net new ARR, and earnings per share, Evercore ISI's revision reflects a cautious outlook based on Adobe's fiscal 2026 guidance and the broader market environment.

The consistent downgrades and price target reductions reflect the challenges Adobe faces in sustaining its growth amid evolving market dynamics and competitive pressures. While innovation in AI continues, the pace of monetization and market adoption will be critical factors influencing investor sentiment and stock performance.