Adobe Falls 4% as Wells Fargo Cuts to Underweight With $225 Target; ServiceNow Climbs 3%, Intuit Ticks Up
Wells Fargo just pushed Adobe to its lowest rating tier while the rest of enterprise software rallies, raising a pointed question about whether the creative giant's subscription base is about to crack under pressure from rival AI tools.
Enterprise software names are rallying, and Adobe (NASDAQ:ADBE | ADBE Price Prediction) is the notable exception after a fresh Wall Street downgrade. Adobe stock is down 4% to $233.50 this morning. That leaves Adobe shares down 31% year to date, a deep hole compared with the gains elsewhere in the group.
Two benchmark funds show how unusual that stillness is. The iShares Expanded Tech-Software Sector ETF (CBOE:IGV) is up 0.6%. Meanwhile, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.2%, leaving software higher, large-cap technology lower and Adobe stock flat against both.
Notably, ServiceNow (NYSE:NOW) stock is at $144.39, up 3%. Additionally, Intuit (NASDAQ:INTU) stock is at $306.37, up 1%. Among these three subscription names, only Adobe stock is falling.
Wells Fargo Drops Adobe to Underweight
Wells Fargo downgraded Adobe to Underweight from Equal Weight and cut its price target on Adobe stock to $225. The move to the lowest rating tier lands on a company already carrying questions about how fast its subscription revenue is growing. Rival AI tools raise a second concern, since software built by competitors could erode demand for creative products over time.
Separately, the Department of Labor last week suspended Adobe from its Permanent Labor Certification program, a move tied to multiple active federal investigations. That episode precedes the downgrade.
Solid Quarter Collides With Renewal Worries
Recent results gave the bull side real material. In its Q3 FY2026 report, Adobe posted adjusted EPS of $6.13 against a $6.09 estimate, and its revenue climbed 12.9% year over year to $6.76 billion.
Within that total, subscription sales rose 14% to $6.58 billion, while AI-first annual recurring revenue grew more than 150% year over year. Management also raised its full-year outlook, and Adobe reached 1 billion monthly active users.
For comparison, ServiceNow lifted its Q2 FY2026 revenue 24% year over year, and Intuit posted 13.7% growth in its Q4 FY2026 sales. Adobe stock trades at a steep discount. At a forward P/E ratio of 9x, it sits far below the 28x multiple on ServiceNow stock, showing how much growth skepticism is already priced in. Lower expectations can cut both ways, protecting Adobe shares if renewals hold and offering little support if they slip.
What to Watch Next
Adobe stock bulls can lean on enterprise customers being slow to pull established creative and document workflows out of their operations, which makes the subscription base harder to shift than a free alternative suggests. A leadership transition adds a second uncertain variable, with an incoming chief executive set to take the helm. Shareholders can watch for whether renewal trends hold firm as rival AI tools spread.
The bear case is clear. A downgrade to the bottom tier, paired with a target below where Adobe stock trades, implies erosion that could surface in renewals before it reaches headlines. Adobe’s Q4 FY2026 revenue outlook of $6.8 billion to $6.85 billion marks the next checkpoint for that subscription question. Investors should keep their position sizes measured until the buying across software spreads to Adobe stock.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
