Adobe (ADBE) Faces ‘Significant AI Disruption,’ Analyst Slashes Price Target to $280

Adobe Inc. (NASDAQ:ADBE) is one of the 10 Trending AI Stocks on News and Ratings. On July 2, the stock was downgraded by Redburn Atlantic analyst Omar Sheikh from ‘Neutral’ to ‘Sell’ with a price target lowered from $420.00 to $280.00. The firm cited increasing risks to its competitive position as generative AI modifies the creative software industry.

“Adobe’s moat is being eroded by tools including Sora, Veo, Imagen, Runway and Midjourney, which now dominate the ideation phase of the content creation process.” – Omar Sheikh, equity analyst at Rothschild & Co Redburn.

Sheikh further noted that editing and workflow are also likely to face disruption, which may further disrupt Adobe’s ability to sustain its pricing power.

“In this context, we think that to say Adobe faces significant AI disruption is not a controversial statement.”

The firm expects Adobe’s free cash flow (FCF) growth to slow to low single digits by 2030. It now values the stock at 12x 2026 EV/FCF, compared to the current 17x.

“We now model FCF growth slowing from 8% pa in 2026 to 3% pa by 2030.”

Image By peshkov - Adobe Stock

Analyst Omar Sheikh has also highlighted that Firefly is behind competitive alternatives in terms of output quality. The so-called “performance gap” may further widen, pushing customers to superior tools from rivals like OpenAI and Google.

Since the company faces a difficult transition period, Sheikh believes “the multiple deserves to contract further.”

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Disclosure: None.