Investing.com -- Morgan Stanley took a mixed stance on software stocks Tuesday, growing bearish on Adobe and Workday even as it maintained an ’Attractive’ view on the sector overall.

Adobe fell 3.8% in premarket trading Tuesday, while Salesforce and Intuit slid 2.9% and 4.3%, respectively. Workday shares also dipped 4.2%.

Analysts led by Adam Wood started Adobe at Underweight with a $240 price target, citing concerns that the company faces multiple transitions at once. Adobe’s shift toward freemium pricing, along with changes in its CEO and CFO, and a move toward heavier AI reinvestment, "elongate the path to durable annual recurring revenue (ARR) reacceleration," the analysts wrote.

They added that portions of Adobe’s workflow are increasingly exposed to AI-native substitution among consumer and business users, even as its core creative-professional business retains a meaningful moat.

Morgan Stanley also began coverage of Workday at Underweight, with a $145 price target, saying the company’s moat remains one of the strongest in software but that its AI initiatives are unlikely to “drive a meaningful growth acceleration yet in the near term.”

Salesforce and Intuit were both started at Equal-weight. For Salesforce, Wood pointed to a "tale of two cities," noting that strong momentum in Agentforce and Slack has not been enough to offset weaker areas such as Commerce and Tableau, with overall organic growth slowing.

The stock was assigned a $185 price target.

On Intuit, given a $335 price target, analysts said the stock’s “price and valuation have been heavily impacted by negative investor perceptions of its moat.”

“The concern is that LLMs will be able to file taxes and provide entry level accounting software at a much lower price,” they added. But the analysts said those fears are "overdone," noting Intuit ranked 12th out of the bank’s coverage universe on moat strength, though it ranked lower on "journey," or readiness for the next phase of AI-driven software.

The ratings changes were part of a broader Software report in which Morgan Stanley introduced a "Moat & Journey" framework to evaluate software companies’ durability and growth prospects in the AI era.

The bank named Microsoft, Palo Alto Networks, CrowdStrike, Cloudflare, Datadog, ServiceNow, Snowflake and Shopify as its highest-conviction Overweight-rated stocks.

Elsewhere in the report, Morgan Stanley downgraded Rapid7 and PagerDuty to Underweight, and cut ratings on Elastic, JFrog, NICE, Wix, BlackLine and Vertex to Equal-weight, citing valuation concerns or a longer path to AI-driven growth.