Adobe Faces AI Threat, Stock Drops 31%

SemiAnalysis CEO Dylan Patel warns Adobe faces a structural threat from AI commoditization, arguing average users no longer need subscriptions as video editing tools grow cheaper and more accessible. Despite entrenched workflows providing some durability, Adobe's stock has fallen 31% year-to-date. Adobe's Q1 FY2026 results beat estimates with $6.40 billion revenue and tripled AI-first ARR, yet shares dropped 11% post-earnings. Trading at a historically low forward P/E of ~10x, the company's future hinges on whether AI tools like Firefly can offset growing competition from free and low-cost alternatives.