For those not already familiar, software company Adobe (NASDAQ:ADBE) has been making inroads into the AI space. While Adobe’s offerings are being met with some very welcome approval, it’s not giving Adobe’s stock price much help. In fact, Adobe stock is down fractionally in Wednesday afternoon’s trading despite receiving the approval of computing giant IBM (NYSE:IBM).
IBM’s recent trial of Adobe’s tools revealed that, when used properly, a massive boost in productivity was readily realizable. One test, featuring global chief design officer Billy Seabrook, revealed that a process that used to take two weeks could now be completed in two days when backed up by Adobe’s tools. This was particularly true for Adobe’s line of tools for converting text prompts to images.
Facing Down Threats
So, why is Adobe on the ropes in today’s trading after what should have been a killer endorsement? Well, one problem traces back to Figma. Adobe tried to acquire Figma a while back, but now, Figma is shaping up to be a major competitor to Adobe’s lineup. Worse, Adobe actually had to fund its new competitor, shelling out a cool billion dollars as part of a “reverse termination fee.” And with Figma looking at $600 million in annual recurring revenue just for 2023, it’s on track to become a major player in the same field Adobe is in.
Is ADBE Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ADBE stock based on 21 Buys, four Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 57.19% rally in its share price over the past year, the average ADBE price target of $649.52 per share implies 20% upside potential.
