HSBC Upgrades Adobe to Buy, Says AI Disruption Threat Is Overestimated
Miles Bennett
HSBC upgraded Adobe from hold to buy with a $308 price target, arguing that AI competitors pose limited real threat to Adobe's business and the market has overpriced the risk — Adobe shares rose about 2% premarket on the news.
Why is HSBC turning bullish now?
Analyst Stephen Bersey's core call: the market has overstated the negative impact of AI design tools on Adobe, and the return now exceeds the risk.
Price target raised from $282 to $308; rating upgraded from hold straight to buy.
This means → HSBC believes the "AI will disrupt Adobe" panic has gone too far, and the stock already carries an excess risk discount.
Has AI actually hurt Adobe's business?
Fiscal Q2 revenue grew 12.7% year-over-year; management guided FY2026 full-year growth at 11.8% — a steady low-double-digit pace with no visible AI disruption so far.
Remaining performance obligations (RPO) — contract value signed but not yet recognized — and current RPO both grew 13.1% year-over-year, signaling firm customer lock-in.
In plain terms = customers are not leaving; they are still signing long-term contracts — the hardest evidence that substitution is not happening.
Why haven't users switched to AI rivals?
HSBC points to two layers of stickiness: deep familiarity with Adobe's workflow + AI features already embedded inside the platform by Adobe and third parties.
This means → users are not ignoring AI tools — AI is already built into Adobe's platform, which sharply reduces any incentive to switch.
Put simply = users know Photoshop's workflow by heart, and AI features ship right inside it — there is little reason to abandon the whole toolchain for a standalone AI app.
What has AI actually done for Adobe?
Adobe's AI-first revenue grew roughly threefold year-over-year, yet it still accounts for only about 2% of fiscal Q2 total revenue.
HSBC's team reads this as confirmation: users adopt AI features on top of existing workflows, not as a replacement.
This reflects a deeper signal — AI is currently "addition," not "substitution" for Adobe; but whether this logic can keep sustaining double-digit growth is the key node to watch going forward.
Content is for reference only, not financial advice.