"AI Story" cannot save performance, Adobe (ADBE.US) downgraded by multiple investment banks consecutively.

Notice that investment bank Oppenheimer has become the latest financial institution to downgrade Adobe (ADBE.US), lowering the creative software company's rating from "outperform" to "market perform." Lead analyst Brian Schwartz of Oppenheimer stated in a detailed investor report on Tuesday, "We have been bullish on Adobe because we expected the momentum of its artificial intelligence business to rejuvenate growth in its Digital Media segment. However, developments have not unfolded as we anticipated, as evidenced by a further slowdown in digital media growth in the fiscal year 2025." Schwartz continued, "We see Adobe as having good medium-term opportunities and being undervalued. However, the challenging operating environment during the artificial intelligence technology transformation has led to lackluster and decelerating revenue growth, poor product cycle execution, concerns about the sustainability of its moat, waning investor interest in software stocks, and a year-over-year decline in operating profit margin guidance for fiscal year 2026. These factors may impact market sentiment on the company's growth prospects this year and limit upside potential for ADBE stock in the short term." This is the latest rating downgrade that Adobe has faced. Last week, Bank of Montreal and Jefferies Financial Group Inc. downgraded Adobe's rating to "market perform" and "hold" respectively. Prior to this, KeyBanc had downgraded the stock to "underweight" in mid-December. This also reflects a broader trend where software stocks have not received the same boost as hardware stocks in the artificial intelligence wave. However, Oppenheimer still has several companies in the software sector that it finds attractive, including Microsoft Corporation (MSFT.US), Salesforce, Inc. (CRM.US), ServiceNow (NOW.US), and Agilysys (AGYS.US). Schwartz stated, "We believe that with the expansion of new data center scale, Microsoft Corporation's Azure performance may pick up in the second half of fiscal year 2026. ServiceNow and Salesforce, Inc. are thematic investments in the artificial intelligence market - these companies need to turn investor sentiment around ('show-me' stocks) and perform well in acquisitions. Finally, benefiting from Marriott's business, Agilysys is likely to see accelerated growth and significant improvement in profit margins in fiscal year 2027."