Generative AI Tools Threaten Adobe’s (ADBE) Edge, Analyst Reiterates Sell

Adobe Inc. (NASDAQ:ADBE) is a Must-Watch AI Stocks on Wall Street. On September 1, Rothschild Redburn analyst Omar Sheikh reiterated a Sell rating on the stock with a $280.00 price target.

The firm said that it spent the last few days testing the released preview of Google’s Nano Banana image editing model. Their takeaway is that it has the potential to seriously challenge Adobe Photoshop, impacting Adobe’s ability to gain new customers and raise prices.

Both Nano Banana and Runway’s Aleph have been leveraging generative AI for their tools, demonstrating the fast pace of improvement. Newer and more disruptive models could emerge within months, putting a question mark on Adobe’s competitive moat.

“We spent the last few days testing the recently released preview of Google’s Nano Banana image editing model. We believe it will disrupt Photoshop, one of Adobe’s most widely-used applications, adding to ongoing pressure on the company’s seat growth and pricing power. Nano Banana and Runway’s Aleph demonstrate the leap forward in the performance of genAI tools in recent months, and the pace of improvement is a key concern: image and video generation models with fully editable outputs look increasingly likely to emerge within months, which we argue will call into question the durability of Adobe’s moat. We reiterate our Sell rating.”

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