Software Stocks Hit Hard by AI Concerns, Intuit and Others See Sharp Declines
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 18 2026
0mins
Should l Buy ADBE?
Source: seekingalpha
- Weak Software Performance: Renewed anxiety over AI disruption has led to a poor start for software stocks this year, with Morgan Stanley's SaaS index down about 15%, marking the worst opening since 2022 and reflecting growing investor caution regarding long-term growth expectations.
- Erosion of Traditional Software Value: Concerns that AI tools could undermine the value of traditional software products were reignited by a recent release from AI startup Anthropic, causing sharp declines in shares of Intuit, Adobe, and Salesforce, which further exacerbated market unease.
- Increasing Industry Divergence: While the Nasdaq 100 approaches record highs, many software stocks are languishing at multi-year lows, indicating that incumbents have yet to demonstrate meaningful revenue acceleration from their AI initiatives, leading to diminished confidence in future growth.
- Valuations at Historic Lows: Despite software stock valuations falling to historic lows, with Morgan Stanley's basket trading at roughly 18 times forward earnings, well below historical averages, investor confidence remains weighed down by uncertainty over how AI will reshape the software business model, leaving the sector still searching for a catalyst.
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Analyst Views on ADBE
Wall Street analysts forecast ADBE stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ADBE is 454.52 USD with a low forecast of 310.00 USD and a high forecast of 660.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
24 Analyst Rating
17 Buy
6 Hold
1 Sell
Moderate Buy
Current: 269.390
Low
310.00
Averages
454.52
High
660.00
Current: 269.390
Low
310.00
Averages
454.52
High
660.00
About ADBE
Adobe Inc. is a global technology company. The Company's products, services and solutions are used around the world to imagine, create, manage, deliver, measure, optimize and engage with content across surfaces and fuel digital experiences. Its segments include Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment is centered around Adobe Creative Cloud and Adobe Document Cloud, which include Adobe Express, Adobe Firefly, Photoshop and other products, offering a variety of tools for creative professionals, communicators and other consumers. The Digital Experience segment provides an integrated platform and set of products, services and solutions through Adobe Experience Cloud. The Publishing and Advertising segment contains legacy products and services. In addition, its Adobe GenStudio solution allows businesses to simplify their content supply chain process with generative artificial intelligence (AI) capabilities and intelligent automation.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Investor Reactions: Following the video's release, investors are reminded to consider the potential risks associated with tech stocks, which could prompt them to adjust their holdings in the short term to mitigate market volatility.
- Industry Outlook: The mention of the DeepSeek moment in the video suggests that the tech sector may be at a significant turning point, necessitating close monitoring of the financial health and market performance of relevant companies.
- Subscription and Promotion: The video encourages viewers to subscribe and click on a special offer link, indicating the content creator's intent to enhance audience engagement and increase platform influence and revenue.
See More
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- Investor Sentiment: Despite recent difficulties, there is a renewed sense of hope and positive sentiment in the market, suggesting a possible recovery.
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- Financial Condition Analysis: In the first nine months of 2025, Figma reported $752 million in revenue, a 41% increase year-over-year, but operating expenses exceeded revenue, resulting in a net loss of over $1 billion, highlighting challenges in profitability.
- Untapped Market Potential: Figma estimates its addressable market at $33 billion, with projected revenue of $1.05 billion for 2025, indicating that the company has barely tapped into its growth potential, while its forward P/S ratio of 9 suggests a reasonable stock price.
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See More
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- Small-Cap Characteristics: Notably, two of these stocks have market caps under $5 billion, reinforcing Mullin's preference for smaller stocks, which could influence his decisions on the Armed Services Committee, particularly regarding future government contracts.
- Historical Trade Review: Prior to this, on December 29, 2025, Mullin bought six of the Magnificent Seven stocks, investing at least $50,000, highlighting his preference for tech stocks, with Microsoft Corp (MSFT) being the largest investment.
- Potential Conflict of Interest: Given Mullin's role on the Armed Services Committee, Benzinga will closely monitor his future stock trades, especially concerning potential conflicts arising from military actions in countries like Venezuela.
See More
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- AI Tool Threat: CNBC tested the threat of AI to software companies using Anthropic's AI coding tool Claude Code, which demonstrated the ability to generate functional prototypes in a short time, posing a challenge to traditional software like Monday.com, valued at $5 billion.
- Market Reaction: Recent sell-offs in software, legal services, and video game stocks stem from fears of AI's new features, with investors particularly concerned about tools like Atlassian, Adobe, and HubSpot that are seen as more vulnerable to disruption.
- System Security Analysis: While record systems like Salesforce are relatively secure due to their core enterprise data, they are not immune; analysts suggest that the rapid advancement of AI could impact these systems' market positions, especially in a fast-evolving tech landscape.
- Investment Opportunities: The wholesale sell-off in the software sector presents investors with the chance to differentiate between 'need-to-haves' and 'nice-to-haves', allowing them to identify companies that maintain competitive advantages amid the AI wave for long-term returns.
See More
