Melius Research warned of several compressions for software-as-a-service firms and downgraded Adobe from Hold to Sell on Monday, with a price objective of $310.00.

The shares of the software giant, which are presently valued at $144.67 billion, have dropped sharply and are currently trading close to their 52-week low of $332.01. Statistics from InvestingPro show that over the past six months, the stock has dropped by more than 25%.

Melius's conclusion that "AI is eating software," which reverses the earlier "software eating the world" narrative that favored SaaS leaders, coincides with the downgrading. Adobe's stock, like that of rivals Atlassian and Salesforce, has already fallen more than 20% this year.

Melius notes that SaaS investors "have never seen this kind of threat" since 2011, drawing comparisons to how cloud computing destroyed the values of hardware businesses like Dell, HP, and IBM in the 2000s and 2010s.

With lower predictions for 2026 and 2027, the company's $310 price objective is about 13 times Adobe's fiscal year 2027 estimates. As this trend continues, Melius anticipates that value will continue to move from SaaS companies like Adobe, Salesforce, and Workday toward infrastructure suppliers like Microsoft and Oracle.

Adobe has been at the heart of a number of noteworthy happenings in other recent headlines. The business extended its AI-assisted content production platform to smartphones with the release of its Firefly mobile app for iOS and Android. With capabilities including text-to-image and text-to-video conversion, this new tool lets users create and modify pictures and films using text suggestions. In financial news, DA Davidson reaffirmed its $500 price target and Buy rating for Adobe, noting confidence over the company's digital content creation plan. A conversation on Adobe's competitive positioning and growth objectives with its finance leaders provided backing for this. On the other hand, Redburn-Atlantic reduced its price target to $280.00 and downgraded Adobe from Neutral to Sell because of worries about how AI disruption might impact Adobe's competitive advantage. Additionally, when Canva announced that it would buy MagicBrief, an AI-powered ad platform, Citizens JMP kept its Market Perform rating on Adobe. DA Davidson concluded by highlighting Figma's exceptional financial performance, citing $821 million in sales over the preceding 12 months—a 48% rise from the year before.