Citi initiates Figma with Buy rating, sees AI monetization driving growth

Investing.com -- Citi initiated coverage of Figma with a Buy/High Risk rating and a $36 price target, arguing that investors are underestimating the company's ability to monetize artificial intelligence despite growing competition from low-cost and AI-native design tools.

The brokerage said concerns that AI-driven efficiencies could reduce the number of paid seats are likely to be offset by higher-value subscription upgrades, broader adoption among non-design users, and increased consumption of AI-powered services.

Figma's early AI traction appears stronger than expected, according to Citi's customer and go-to-market checks with hyperscale technology firms and large financial-services companies. The bank said it is seeing evidence of upgrades to higher-tier seats and growing usage of AI credit packs, supporting its view that the company's AI monetization strategy is gaining momentum.

As a result, Citi's revenue forecasts for the second quarter and fiscal 2026 are 7 and 9 percentage points above Wall Street consensus estimates, respectively. The firm expects AI-related seat upgrades and usage-based revenue to more than offset any moderation in seat expansion.

Citi estimates Figma's total addressable market at roughly $25 billion in 2025, with only about 4% penetration, and believes the opportunity could expand to around $50 billion by 2029 as the company broadens its product portfolio and use cases. The bank added that AI could accelerate adoption by enabling new application development and attracting knowledge workers who were not previously targeted customers.

The brokerage also sees several potential catalysts ahead, including Figma's upcoming Config conference, new product launches, monetization opportunities tied to its Model Context Protocol (MCP) server initiatives, and further AI feature rollouts. Those positives are partially offset by a final lock-up expiration expected in mid-August.

Citi said its $36 price target implies a valuation of about 9.4 times enterprise value to fiscal 2027 revenue, a premium it believes is justified by the company's growth prospects and AI upside. The bank noted that Figma's valuation remains modest relative to larger software platforms such as Salesforce and Adobe, and below Adobe's previously proposed $20 billion acquisition offer despite Figma's continued growth.

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