FaBai Bank analysis software stock sell-off: Adobe (ADBE.US) needs to bridge the gap between "free to paid" and Oracle Corporation (ORCL.US) equity financing unexpectedly calms market anxiety.

Investment bank BNP Paribas in Paris, France, has expressed its views on the recent selling wave of enterprise software stocks such as Oracle Corporation (ORCL.US) and Adobe (ADBE.US). Adobe's AI monetization cycle is long Regarding Adobe, analyst Stefan Slowinski at the bank noted that its stock price is under pressure from "AI disruptive concerns" and that Adobe is likely aware that it needs to stabilize and then accelerate in order to ease these concerns. However, Slowinski stated that this may not happen quickly. In a client report, Slowinski wrote, "As new users can now start with free products (currently with 70 million monthly active free users and growing rapidly), the time to monetize customers may be longer than before." "Although Adobe remains confident in the value its products can provide (user and usage growth remain resilient - expected to at least maintain flat net new annual recurring revenue this year), the business model may take time to re-accelerate growth. Additionally, positioning Adobe as a model aggregation platform for the creator community will also take time to develop." However, the company plans to hold the Adobe Summit in April. Slowinski pointed out that the information conveyed at that time may focus on the data of products affected by AI, rather than being "AI-first." He explained that new AI-driven factors this year may include: a shift towards third-party model usage; demand for higher resolution; and growth in video consumption - factors that will in turn drive more credit consumption. Oracle Corporation calms the market with equity issuance For Oracle Corporation, the issue revolves around its balance sheet. The company recently announced its 2026 capital plan, which includes raising up to $50 billion through debt and equity financing. Slowinski explained, "While we believe that debt issuance was largely expected by the market, the equity issuance was somewhat surprising, as the focus of financing discussions has been on the credit side since last October's Investor Day." "We believe that the debt market pressures faced by software companies, including Oracle Corporation, likely led to this equity issuance. From the initial market reaction, we believe this financing arrangement has somewhat calmed market sentiment." Slowinski added that he does not expect supplier financing to occur, and Oracle Corporation continues to indicate that the amount of financing needed will not exceed the $100 billion mentioned in the last financial report. "In general, we believe Oracle Corporation remains confident in achieving its 2030 goals," Slowinski further stated. "Data center construction and delivery goals are progressing as planned, with funds in place. While more contracts and order backlog expansion may be needed in the coming years to achieve the 2030 revenue and profit goals, Oracle Corporation expects its existing AI clients to bring in more orders as the AI arms race continues."