Jefferies Cautious on Adobe (ADBE) As It Updates Outlook on Software Sector

Adobe Inc. (NASDAQ:ADBE) is one of the most undervalued blue chip stocks to buy now.

On January 5, 2026, TheFly reported that Jefferies downgraded Adobe Inc. (NASDAQ:ADBE) from ‘Buy’ to ‘Hold’, while reducing its price target from $500 to $400. The update comes as part of the firm’s 2026 software sector “playbook.” The firm sees increasing competitive pressure in the lower-end segment. The segment is marked by users who have access to several AI-enhanced alternatives to Creative Cloud. Despite intensifying competition, the firm describes Adobe Inc. (NASDAQ:ADBE) as well-protected among creative professionals and power users who leverage the company’s advanced features. While the investment firm projects high single-digit revenue growth, it doubts that the company could hit low- to mid-teens acceleration without a step-function increase in creative AI mindshare. Thus, Jefferies emphasized the need for stronger AI positioning.

Additionally, the firm sees 2026 as another year of gradual AI monetization. It expects overall growth in applications to fall behind other segments, such as semiconductors. As a result, Jefferies inclines toward infrastructure over applications in the first half of the year. However, it expects negative sentiment toward applications to improve in the back half.

Adobe Inc. (NASDAQ:ADBE) delivers digital marketing and media solutions. It has offerings in creative content, customer experience management, publishing, and advertising.

While we acknowledge the potential of ADBE to grow, 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 ADBE and that has 100x upside potential, check out our report about this cheapest AI stock.

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