Investing.com -- William Blair downgraded Adobe to Market Perform in a note Thursday, citing “intense competition” across the company’s core Creative Cloud franchise and rising uncertainty around its long-term competitive position.

Analyst Arjun Bhatia said he is assuming solo coverage of Adobe, explaining that while the stock trades at just nine times free cash flow, “our primary concern is around the intense competition Adobe faces.”

According to William Blair, the competitive backdrop raises “legitimate questions” about Adobe’s pricing power, its ability to differentiate, and its “right to win the AI opportunity.”

Bhatia stressed, “To be clear, we are not calling Adobe an ‘AI loser’ … but acknowledging that the unknown answers to these questions are likely to keep the stock at least range-bound.”

The firm highlighted how AI has “overnight, democratized the highly technical skills creative professionals had built,” accelerating pressure already building from rivals such as Canva and Figma.

Canva has reached $4 billion in ARR, growing over 30%, while Figma is at a $1.2 billion run rate, expanding 40%, compared with Adobe’s far larger but slower-growing $19 billion Digital Media business.

Bhatia also pointed to fast-growing “AI native” competitors, including Midjourney, Runway and StabilityAI, and heightened interest from major platforms like Google, OpenAI, and Apple.

While it is too early to pick long-term winners, William Blair warned that Adobe’s “very healthy mid-40s operating margin profile” could attract further competitive encroachment, adding that margin trends and the company’s ability to capture new AI-driven demand “should be monitored.”