Wall Street Collectively Downgrades Adobe and Salesforce Ratings to Multi-Year Lows
N.R. Finch
Morgan Stanley downgraded both Adobe and Salesforce on Tuesday, pushing their consensus ratings to the lowest since the 1990s and since 2012 respectively — the latest sign that Wall Street's AI-disruption fears have spread from single names to a sector-wide repricing.
How low have the ratings fallen?
Adobe's consensus rating dropped to 3.3 out of 5, the lowest in nearly thirty years. More than twelve firms have cut their rating this year; at least five did so since early June alone.
Salesforce's consensus rating fell to 4.4, the lowest since 2012, after back-to-back downgrades from Morgan Stanley and KeyBanc Capital Markets.
This means → Neither stock is being singled out by one contrarian analyst. This is a near-unanimous collective downgrade — market confidence is draining systematically.
What are analysts worried about?
Morgan Stanley's Adam Wood said Adobe faces a triple squeeze: freemium transition, leadership change, and reinvestment. Generative-AI disruption debates are "increasingly obscuring the path to re-acceleration of annual recurring revenue."
In plain terms = Adobe needs subscription revenue to reaccelerate, but AI tools may eliminate the need for its software altogether — the old growth engine is stalling before the new one starts.
On Salesforce, analyst Elizabeth Porter noted that the flagship AI product Agentforce's key metrics "have yet to drive a meaningful inflection in organic growth," while legacy-business drag persists.
Is it just these two companies?
Morgan Stanley also downgraded Workday, Intuit, JFrog, Elastic, and several other software names in the same round. The sole upgrade went to cybersecurity firm Fortinet, rated market-perform.
This means → The call is not company-specific. It is a sector-wide repricing of growth expectations for traditional software.
This reflects a deeper question Wall Street is now revisiting: whether AI competition will permanently erode the software industry's pricing power and margins.
How are shares and the broader sector performing?
The iShares Expanded Tech-Software Sector ETF fell 1% on Tuesday, extending its year-to-date loss to 13%.
Adobe dropped 3.7% on the day, bringing its YTD decline past 35%. Salesforce fell 1.6%, with a YTD loss of 36%.
In plain terms = Both companies have lost more than a third of their market value this year, and the software sector keeps bleeding — this is no longer a short-term pullback but a fundamental re-rating of the entire industry.
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