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ADP Downgraded to Underperform as Jefferies Flags Structural Headwinds

Automatic Data Processing, Inc. (NASDAQ:ADP) is included among the 14 Best Dividend Aristocrats to Invest in Heading into 2026.

On December 16, Jefferies analyst Samad Samana downgraded Automatic Data Processing, Inc. (NASDAQ:ADP) to Underperform from Hold and cut the price target to $230 from $245. The firm said it “thinks highly” of management, but described the company’s fundamental outlook as “shaky.” The analyst pointed to market saturation, larger and more scaled competitors, and falling interest rates as headwinds for growth in 2025. Jefferies said challenges are likely to build, adding that ADP’s medium-term targets look “difficult to achieve.”

In fiscal Q1 2026, Automatic Data Processing, Inc. (NASDAQ:ADP) reported solid results. Revenue rose 7%, and adjusted EPS also grew 7%. Management highlighted progress on key strategic priorities. The quarter included record sales volume, and the small business portfolio showed healthy growth. Employer Services HR Outsourcing picked up momentum again. Automatic Data Processing, Inc. (NASDAQ:ADP) noted that HCM demand remained relatively stable. There was a specific strength in ADP Lyric HCM.

ADP also announced the acquisition of Pequity, a compensation management software provider. Management said the deal expands ADP’s ability to support more complex compensation planning needs for its clients.

Automatic Data Processing, Inc. (NASDAQ:ADP), commonly known as ADP, is a global provider of cloud-based Human Capital Management solutions. Its services span payroll, HR, tax, talent, and benefits administration for organizations of all sizes.

While we acknowledge the potential of ADP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ADP and that has a 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 14 Best Pharma Dividend Stocks to Buy in 2026 and 15 Global Dividend Stocks to Diversify Your Portfolio.

Disclosure: None.

The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

A few years from now, you’ll wish you’d owned this stock.

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