Faurecia and BNP Paribas take over Bank of America and sing "empty" Adobe (ADBE.US): cloud giants are using AI native tools to "dissect" their entire process moat

Following Bank of America Securities, French bank BNP Paribas recently raised concerns about Adobe (ADBE.US), becoming the latest Wall Street major firm to question its growth prospects in the AI era. Analysts at BNP Paribas released a report after attending the Adobe Summit in London, pointing out that competition from large-scale cloud providers and AI newcomers is eroding Adobe's moat at every stage of the workflow. Intensifying competition: comprehensive erosion from "tools" to "processes" BNP Paribas analyst Stefan Slowinski stated in the latest investor report that the bank's team attended the Adobe Summit in London last week and the feedback received from partners was not optimistic. The bank observed that, in addition to the previous focus on small and medium-sized enterprises like Canva and Figma, super giants with computational power, data, and platform advantages are directly entering Adobe's core creation and marketing processes with AI-native tools, weakening the value of its professional software from the ground up. "While Adobe is trying to defend itself using its influence in existing enterprise workflows, we have noticed that some partners have seen an increasing number of customers turning to tools from large-scale cloud service providers, especially products from Alphabet Inc. Class C (GOOGL.US), to complete all tasks from content creation (such as using Nano Banana and Veo), marketing material preparation, permissions review to marketing campaign launch," wrote Slowinski. The report specifically mentioned competitors, including Loomi AI, an AI product under Bloomreach. Furthermore, the report touched on a deeper risk AI sovereignty. Slowinski pointed out that this is particularly evident in Europe. The analyst stated that this not only means that companies want to limit their reliance on large AI labs, but also that "companies are seeking to 'decentralize' American application companies by using open solutions to build tools and workflows, thereby reducing their reliance on the latter." He cited NVIDIA Corporation's NemoClaw (a solution that encapsulates enterprise-level fences for OpenClaw) as an example of this autonomous controllability. Once companies adopt such open tools on a large scale, Adobe's position as a third-party application provider will be fundamentally impacted. BNP Paribas' cautious tone comes at a time when Bank of America Securities has recently taken a high-profile bearish stance. Just recently, Bank of America Securities resumed coverage of Adobe, giving it an "underperform" rating and setting a target price of only $190. The bank's analysts pointed out that as generative AI lowers the barriers to content creation, low-cost and native AI alternative solutions are increasing the risk to Adobe's growth prospects. Adobe's defensive AI strategy is far greater than its offensive strategy, with AI contributions accounting for less than 2% of annual recurring revenue, and there are no signs of accelerated growth in the short term. Bank of America predicts that there is little likelihood of accelerated growth for Adobe in the short term, as lower-end and amateur user groups are being replaced by "good enough" AI outputs, and a shift to free value-added and consumption-based billing models will bring profit risks, with growth expected to drop from 10.5% to 8.8% in the 2027 fiscal year. The company is still making money, but valuation pricing is for the future There is no denying that Adobe's financial engine is still running. Data shows that the company's annual recurring revenue grew by 11% to $26 billion in the last fiscal year, with free cash flow reaching nearly $9.8 billion, and remaining performance obligations (future income agreed in contracts) amounting to $22 billion, while the profit margin remains at 41%. However, as Bank of America pointed out in the report, Adobe's "valuation is attractive, but there are currently no catalysts." Currently, the stock price-earnings ratio is only 12.5 times. This seems to indicate that the market is pricing in extreme pessimism, betting on the structural growth slowdown and monetization uncertainties facing this creative software giant in the AI era.