Is the era of Photoshop ending? You might be forgiven for thinking so.
Many people aren’t feeling sorry for Adobe after its stock price dropped. For years, the company has been criticized for making it difficult to cancel subscriptions and charging high prices for software that doesn’t always work perfectly. While some might see the stock drop as payback, that’s not the whole story.
You guessed it, the real reasons is all because of AI.
Companies like Adobe and Salesforce are facing challenges similar to those in the gaming industry. This is because artificial intelligence and simpler, more affordable alternatives are emerging that could replace some of their traditional services.
Adobe is famous for programs like Photoshop, Premiere, and Acrobat Reader. For a long time, if you needed to edit photos, create digital art, or design graphics, Adobe was the leading choice. From game design to creating flyers, its software was – and often still is – the main tool for many creative professionals. But now, artificial intelligence is rapidly changing the landscape, even for established companies like Adobe.
Need a simple design for things like newspaper ads or letterheads? AI tools such as Microsoft Copilot, ChatGPT, Grok, and Google Gemini can create them much faster and cheaper than hiring a professional graphic designer. While the results won’t be as polished, it doesn’t make sense to spend a lot of money on a high-end designer for quick, small projects. In fact, even large companies are starting to use AI for these kinds of designs, helping them avoid expensive software subscriptions.
Looking ahead, Adobe’s long-term prospects appear challenging for investors. The tech industry is quickly shifting its focus from simply using Artificial Intelligence to actually making money from it, starting around 2026. And the companies leading the way are almost all heavily involved in AI.
| Company | Description | 1Y Performance (as of writing) | 3Y Performance (as of writing) | Data via |
|---|---|---|---|---|
| Palantir | Data analytics platform | 146.92% | 2318.11% | Yahoo Finance |
| Search engine company | 71.73% | 264.22% | Yahoo Finance | |
| NVIDIA | GPU chip manufacturer | 39.37% | 953.10% | Yahoo Finance |
| CrowdStrike | Endpoint security software | 24.91% | 334.63% | Yahoo Finance |
| S&P 500 | Broad market index | 16.89% | 78.29% | S&P Global |
| Apple | Consumer electronics maker | 12.45% | 90.81% | Yahoo Finance |
| Microsoft | Technology software company | 9.11% | 95.90% | Yahoo Finance |
| Meta | Social networking company | 1.78% | 361.43% | Yahoo Finance |
| Workday | Enterprise cloud applications | -25.46% | 12.10% | Yahoo Finance |
| Salesforce | Customer relationship management | -28.56% | 54.83% | Yahoo Finance |
| Adobe | Digital media software | -30.64% | -14.01% | Yahoo Finance |
| Asana | Project management software | -44.88% | -23.94% | Yahoo Finance |
| Atlassian | Team collaboration tools | -53.37% | -22.47% | Yahoo Finance |
Over the past three years, companies providing the core technology for artificial intelligence – like Microsoft, NVIDIA, and Google – have experienced significant growth. However, companies without a clear and compelling role in the AI field are generally lagging behind the overall stock market.
Some investment banks, including Goldman Sachs, have lowered their ratings for Adobe stock, suggesting investors hold or even sell it. This is because they anticipate that AI tools from companies like OpenAI, Microsoft, and Google will become so powerful that programs like Adobe Photoshop could become outdated. Despite Adobe developing its own AI tools, such as Firefly, they haven’t yet attracted enough users to offset these concerns.
Companies like Salesforce are also experiencing uncertainty related to AI. Microsoft’s advancements in “Agentic AI” are leading some to believe that many existing software systems could become fully automated, with the biggest financial gains going to companies that can provide these tools on a large scale through Microsoft Azure, Dynamics 365, and Office 365. Microsoft is quickly gaining adoption of tools like Microsoft 365 Copilot, even at the national level, as major corporations are using the technology to automate processes and manage documents while still adhering to data privacy regulations and legal requirements.
Companies using older, more established methods have often had trouble adapting quickly to recent changes, according to investors.
Analysts suggest that recent changes in the tech landscape are partly due to inflated expectations and a readjustment following the pandemic. Growing global political tensions, particularly those originating in the United States, have also increased concerns about data control, leading businesses to rethink investments in American technology. Furthermore, many large companies are cautious about using AI in critical operations because of its potential for significant and damaging mistakes. While platforms like Microsoft Dynamics 365 work well for smaller, general businesses, they don’t offer the same level of functionality as systems like SAP when it comes to managing large, complex, global operations – regardless of whether AI is involved.
Adobe faces a particularly tough challenge in the age of AI because its core products are easily replicated by AI tools. To make matters worse, Adobe’s own AI, Firefly, isn’t performing well. When I asked it to create an image of the Photoshop logo sinking into the ocean, the result was unreadable and nonsensical. In contrast, Microsoft Copilot, powered by OpenAI’s DALLE-3, perfectly fulfilled the same request. While I usually prefer using my own photos for article banners, this example clearly highlights Adobe’s current weakness in the face of increasingly capable AI.
Adobe tried to strengthen its position by buying Figma, but regulators blocked the deal due to competition concerns. Figma, along with competitors like Canva, has gained popularity by offering more affordable and user-friendly tools, giving them a clear advantage in the rapidly growing world of easy-to-use AI design.
Adobe offers a glimpse into the future for established software companies. Younger generations now expect modern, user-friendly tools. With the rise of AI and increasing competition in professional content creation, fewer people may be willing to pay for expensive software like Adobe Creative Suite and similar traditional products.
It really makes you wonder why Microsoft seemed so desperate to add AI to everything lately. But watching Adobe struggle shows that just *putting* AI into a product isn’t enough – it actually has to *do* something helpful, you know?
As an analyst, I’m seeing a lot of volatility in the current market. Things are changing rapidly, and the growth of AI infrastructure is really being held back by rising component costs and inconsistent access to electricity. Plus, companies like OpenAI are facing significant pressure to become profitable, which is leading them to explore options like advertising and, in some instances, increasing prices.
I keep hoping that classic software and real human ingenuity will ultimately come out on top… but honestly, I don’t really believe that anymore.
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2026-01-19 20:11