Bank of America reinstates coverage on Adobe with Underperform rating, citing AI-driven pressure on growth

Bank of America has reinstated coverage of Adobe Inc., assigning an Underperform rating and setting a $190 price objective, according to a report carried by Proactive Investors. The call frames generative artificial intelligence, or AI that can produce text, images, and other creative output from prompts, as a factor that could reduce friction for making content, potentially influencing the pace and durability of demand across parts of Adobe’s business.

The analysts’ central concern is that generative AI is lowering the barriers to creating and editing content. If more creation and first drafts happen directly within AI tools, it can shift how and when professional creative software is purchased, especially for customers experimenting with new workflows rather than committing immediately to traditional licenses.

Adobe’s core products span creative and marketing software, along with document and digital experience tools. In practical terms, Adobe sells subscriptions to help individuals and enterprises design assets, edit media, manage brand and marketing workflows, and deliver content across digital channels. As generative AI expands beyond “assistive” features into more end-to-end content creation, software vendors face a more competitive environment for both new subscriptions and upgrades.

Bank of America’s reinstatement arrives as the broader software market wrestles with how AI features affect revenue per user and customer lifetime value. The question for many providers is not only whether AI capabilities attract new customers, but whether those capabilities can preserve pricing power and keep spending focused on a company’s own platform rather than distributing value across multiple AI tools.

Even with AI integrated into creative workflows, Adobe still benefits when customers require high-quality assets, collaboration, compliance, and enterprise-grade distribution or brand management. Those needs are less easily replicated by general-purpose AI alone. Still, the Underperform rating indicates the bank believes those advantages may not be enough, at least in the near term, to offset competitive and workflow changes.

The Proactive report does not lay out additional performance details such as specific revenue targets, segment-level assumptions, or a timeframe for when the AI-related pressures would show up in results. It also does not indicate whether Bank of America believes Adobe’s existing AI offerings will be insufficient, or whether the issue is mainly that AI changes customer behavior before Adobe’s monetization model fully adapts.

For investors, what stands out is the bank’s view that generative AI alters the economics of content creation. When creation becomes easier and faster, customers may be more willing to test tools and switch between options, which can make budgeting for subscriptions more cautious and compress the expected growth profile for traditional creative software.

Next, market watchers will look for how quickly Adobe can translate its AI-enabled features into sustained subscription growth, improved retention, or higher engagement across its creative and marketing suites. Any earnings commentary that addresses customer adoption of AI capabilities, changes in licensing behavior, or guidance around revenue growth would likely determine whether the market treats the Underperform call as temporary caution or as a longer-term thesis shift.