Adobe Inc. (ADBE) used its MAX conference in Miami on Nov. 10 to change how creators work in its apps.
Learning Photoshop has long meant hours of tutorials, menus, and keyboard shortcuts. Adobe now wants creators to describe the job and let an agent handle the clicks.
Wall Street isn’t sold yet. On Nov. 4, Citi Research downgraded the stock to Sell, according to Seeking Alpha. The bank warned of a possible “hard reset,” and the shares have dropped 32% this year.
Adobe’s Creative Agent, which takes on complex, multistep tasks, now spans Creative Cloud, Firefly, and GenStudio, Seeking Alpha noted.
Adobe also previewed tools that let creators bring outside agents into Photoshop, Illustrator, Premiere, and After Effects.
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Adobe is opening its apps to outside agents
Those outside agents plug in through MCP, short for Model Context Protocol. It’s an open standard that lets AI assistants connect to outside software and take actions inside it. The work still lands in Adobe’s own apps.
Adobe paired the launch with partnerships, including AI labs Anthropic and OpenAI, Seeking Alpha reported. Two stand out:
Frontier models from Google, owned by Alphabet Inc. (GOOGL), are coming into Adobe’s tools, while Adobe’s tools are moving into Google’s products.
Optimized versions of Photoshop, Premiere, After Effects, and Substance 3D Painter are coming to Arm-based Windows PCs under a partnership with Microsoft Corp. (MSFT).
That turns Adobe’s old advantage upside down. For decades, the effort it took to master Photoshop kept professionals loyal. If an agent does the clicking, that skill matters less. Adobe is betting its tools and files will matter more.
The bigger risk is who owns the customer. A creator who starts every project in a chatbot may see Adobe as plumbing, not a destination. That would make price increases harder, which is exactly Citi’s worry.
Adobe is letting outside agents work inside Photoshop, Illustrator, Premiere, and After Effects, a week after Citi warned of a possible hard reset.ADRIEN AUZANNEAU / Getty Images
Citi thinks Adobe’s forecasts are too high
A hard reset means cutting the outlook sharply in one move, not trimming it quarter by quarter. Citi flagged risk to Wall Street’s fiscal 2027 growth estimates and to Adobe’s leadership changes, according to Seeking Alpha. The bank also lowered its price target to $207 from $250.
The timing explains why. Anil Chakravarthy becomes CEO on Dec. 1, replacing Shantanu Narayen, who has led Adobe since 2007. Reuters noted that Adobe announced CFO Dan Durn’s exit in June.
Adobe’s next report is on Dec. 9, just days into the new CEO’s tenure. That report usually carries next year’s outlook. New CEOs often prefer to set a low bar early, so that any shortfall lands on the old plan.
Citi analyst Tyler Radke also tied the risk to strategy. He wrote that Adobe’s push for monthly active users “will likely pressure total ARR in FY27/28,” Seeking Alpha noted. ARR, or annual recurring revenue, measures the yearly value of Adobe’s subscriptions.
In Radke’s view, Adobe is skipping price increases and steering new users toward cheaper plans.
He expects the biggest hit in its core Creative business. Weak small business demand and rivals built for the web and AI add to the pressure. The agent push and Citi’s warning describe the same strategy. Easier tools attract more users, but many of them pay less.
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Adobe stock already prices in a lot of bad news
Adobe’s software, from Photoshop to Acrobat, runs much of the world’s design and document work. The stock also sits in the S&P 500, so its slide reaches ordinary index fund investors. The business is still highly profitable.
Adobe earned $7.28 billion in net income over the past 12 months, according to Stock Analysis.
The shares trade at about nine times expected earnings. That multiple signals deep doubt about future growth. Yet Adobe’s revenue still grew 12% over the past year, according to the same data.
The 39 analysts tracked by Stock Analysis rate the shares a Hold on average. Their consensus price target is $266.91, about $60 above Citi’s.
For shareholders, everything hinges on those new users. If easier tools bring in people who later upgrade, today’s price could prove too gloomy. If they stay on cheap plans, Citi’s lower numbers likely become the new baseline.
Software’s pricing model faces its own reset
Adobe’s dilemma reaches beyond design software.
Much of the subscription era ran on a simple formula: keep loyal users and raise prices over time. Agents strain that formula. A tool anyone can direct in plain English is harder to sell as a premium skill.
Rather than wait for them to route around its apps, Adobe chose to let outside agents in. December’s outlook will be the first real test.
Every software company that charges by the seat should watch, because Adobe is running this test in public.
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