Adobe Stock Drops Despite Strong Earnings as AI Competition and Failed Figma Deal Raise Concerns

Adobe reported strong Q1 earnings but shares dropped due to disappointing Q2 guidance and concerns over AI threatening Adobe's competitive advantages.

Adobe sees a big market opportunity in AI with products like Firefly, but analysts question whether guidance reflects optimism about near-term benefits.

The failed Figma acquisition resulted in Adobe paying a $1 billion breakup fee.

HSBC cut its Adobe price target, citing AI as a threat to its competitive moat by automating creative work.

While some analysts cut targets, others see the pullback as overdone, noting drivers like new product launches and subscriber growth.