Adobe’s Stock Faces a Dual Challenge

Adobe’s shares are under significant pressure, trading just above their 52-week low as the company contends with a two-pronged threat. The stock is caught between a broad-based selloff in the software sector and intensifying competition from rival Figma, which is posting strong results and rolling out new AI models. Investors are increasingly concerned that the market dominance of the creator of Photoshop could be genuinely at risk.

A Tense Market Environment and AI Disruption

The current market sentiment presents a major headwind. Analysts have begun referencing a “Software Mageddon,” driven by fears that artificial intelligence will upend established business models. The selloff in Adobe shares notably accelerated in early February when Anthropic introduced new automation tools. The market is now pricing in the risk that creative software could become commoditized by the rise of generative AI.

Against this nervous backdrop, the performance of competitor Figma is particularly striking. Once a takeover target for Adobe—a deal blocked by antitrust regulators—Figma now shines as an independent public company. It reported a 40% revenue growth for the fourth quarter, significantly surpassing expectations. While Adobe is forced to defend its position, the challenger is going on the offensive: starting in March 2026, Figma will introduce new monetization models for AI applications that directly target Adobe’s core design business.

Should investors sell immediately? Or is it worth buying Adobe?

Solid Fundamentals Clash with Negative Sentiment

From a purely financial perspective, the steep decline in Adobe’s share price appears drastic. The company increased its revenue by approximately 10% to $23.8 billion for the 2025 fiscal year, while net profit rose by 28%. Its operating margin remains robust at 37%. The massive drop in share price has made the valuation considerably cheaper: the price-to-earnings (P/E) ratio has fallen to below 16—a fraction of its historical average, which has often been around 40 over the past five years.

This disconnect between strong financials and weak market sentiment has divided expert opinion. While firms including Goldman Sachs and HSBC have reduced their price targets and emphasized risks, other analysts view the current share level as an overreaction. The average price target still implies considerable upside potential, highlighting the ongoing uncertainty about a fair valuation. Major investors are also split: hedge fund Coatue recently increased its stake substantially, while the sovereign wealth fund Mubadala nearly halved its position.

All eyes are now on March 12, 2026. On this date, Adobe will release its quarterly results and must demonstrate that its own AI integration can withstand the mounting competition. With a closing price of €219.40, the stock is trading very near its 52-week low of €216.55. Whether this level sparks a technical rebound or leads to another slide will depend heavily on the upcoming report.