Will Adobe be swallowed by AI, or will it become the "creative infrastructure" of the AI era?

Will Adobe be swallowed by AI, or will it become the "creative infrastructure" of the AI era?

Can Adobe Survive in the Age of AI? Firefly Questions the Next Value of the "King of Creative Software"

With the advent of generative AI, Adobe is one of the software companies facing the most scrutiny. Having long established itself as the "standard tool" in the world of creative and document production with products like Photoshop, Illustrator, Premiere Pro, and Acrobat, the company is now being questioned by the market: will it be replaced by AI, or will it integrate AI?

An article from Seeking Alpha points out that Adobe's stock has fallen by about 30% since the beginning of the year, due to investor concerns that AI might undermine the company's business model. This is not just a matter of stock price fluctuations. Just as Adobe once transitioned from package sales to subscriptions, the company is once again being forced to redefine its business model.

However, this change is more complex than the previous shift to the cloud. While cloud adoption was a change in sales format, generative AI changes the production process itself. Tasks that designers, video editors, and marketers used to spend hours on can now be drafted with a single prompt. Background generation for photos, video material editing, presentation creation, and mass production of advertising creatives. AI not only supplements the functions of Adobe products but also brings us closer to a world where outcomes can be created without even opening Adobe products.

Therefore, market concerns are understandable. If users decide that tools like ChatGPT, Claude, Canva, Figma, and Google's generative AI tools are sufficient, Adobe's high-priced subscription may be reconsidered. For individual creators and small businesses, monthly fees are always a burden. On social media, there are persistent voices saying "Adobe is expensive," "alternative tools are enough," and "the frequency of using Photoshop decreases with AI."

On the other hand, it's premature to view Adobe solely as a "victim of AI." Adobe's strength lies not just in generating images or videos, but in having a plethora of tools to finalize the last few percent of a production. While generative AI is strong in brainstorming and drafting, it has not yet fully replaced existing professional workflows in areas like adjustments according to brand guidelines, detailed layer editing, quality control for print, video, and ad distribution, and the peace of mind of commercial use including rights management.

This is why Adobe is putting Firefly at the forefront. Firefly is a core brand that integrates generative AI functions for images, videos, audio, and vectors into Adobe's various products. Adobe is not only selling Firefly as a standalone AI service but is also embedding it into Photoshop, Illustrator, Premiere, Adobe Express, and the entire Creative Cloud to create an experience where "if you use AI, it all happens within Adobe."

This is both a defensive and offensive strategy. In the world of generative AI, the models themselves may rapidly become commoditized. Image generation models, video generation models, and audio generation models will appear one after another, and performance differences will narrow in a short period. When that happens, the competition shifts from "which model is the most amazing" to "how easily can that model be integrated into practical work." Adobe is targeting precisely this.

In fact, Adobe is also focusing on the AI assistant in Adobe Express and the agent AI on Firefly. When users instruct "prepare this image for advertising," "match this material to brand colors," or "restructure for video," AI is moving towards executing tasks that span multiple Adobe apps. This is not merely an "addition of generative AI functions." It is an attempt to transform the suite of tools Adobe has built over the years into targets for AI agent operation.

If this direction succeeds, Adobe may not be seen as a company destroyed by AI but rather re-evaluated as the production infrastructure of the AI era. In other words, the flow where users finish, manage, distribute, and monetize materials created by AI in the Adobe environment. If AI explosively increases the amount of content, the demand for tools to refine, verify, align with brands, and distribute that content will also increase. This is Adobe's assertion.

However, the market is not yet convinced because it is unclear how much the increase in AI usage will translate into revenue. Adobe announced record sales in the first quarter of fiscal 2026, emphasizing subscription income and AI-related ARR growth. The use of Firefly and the consumption of generative credits are also expanding. But what investors want to see is not just an increase in usage. They want to know how AI contributes to acquiring new customers, transitioning existing customers to higher plans, reducing churn rates, and maintaining profit margins.

The Seeking Alpha article also highlights net new ARR as a key metric. This is an important figure to measure whether Adobe's shift to AI is truly boosting growth. Even if sales are stable, if the growth of new annual recurring revenue slows, the market will judge that "AI is reducing growth potential." Conversely, if ARR re-accelerates due to Firefly and AI assistants, there is a possibility that the stock will be re-evaluated as "oversold due to AI concerns."

 

Social media reactions also reflect this polarization well. In Reddit's investment community, there are bullish posts about Adobe. They argue that the view that AI will kill Adobe is just a narrative, and in reality, Adobe is a company with high profit margins and strong cash generation, making its valuation attractive due to the stock price decline. Regarding Firefly, there is also a view that Adobe's safety is a strength for large companies that emphasize rights in commercial use.

On the other hand, there are cautious views on the same Reddit. Opinions like "Adobe is a good company, but not necessarily a good stock" are expressed. Behind the bullish focus on profit growth and share buybacks, there are doubts about whether actual cash flow growth is sufficient and whether the competitive environment changes due to AI are being factored in. In other words, while recognizing Adobe's brand and product strength, as a stock investment, the balance between growth rate and expectations is challenging.

Reactions on Japan's Yahoo! Finance board are also divided. Recent posts praise Adobe's AI features and new Illustrator functions, while others express impatience about "when will it be the turn for software stocks" and hope for a return to past stock price levels. Interestingly, there are posts that view AI not as a simple threat but as something that "AI agents actually need Adobe." This is quite close to Adobe's strategy. The more AI creates something, the more the value of specialized tools for editing, correcting, and managing those outcomes remains.

In creator-oriented social media reactions, another point stands out. In Photoshop-related communities, there is a demand to use external generative AI models and plugins within Photoshop, while Adobe Firefly is also evaluated as relatively reassuring in terms of rights. Especially in production sites that require corporate projects and legal checks, "what was used to create it" and "is it okay for commercial use" become important. As the quality of generative AI becomes more uniform, Adobe's emphasis on "peace of mind for commercial use" can become a differentiating factor.

However, Adobe also has weaknesses. First, dissatisfaction with pricing. While Adobe in the subscription era gains stable revenue, users have expressed dissatisfaction with it being "expensive," "hard to cancel," and wanting to use only necessary functions. If free or low-cost tools increase in the AI era, some individual users may shift to alternatives.

Second, the issue of speed. The evolution of generative AI is extremely fast. Emerging companies focus on single functions, have lightweight UIs, and are easily spread on social media. In contrast, Adobe has a large existing product lineup and needs to incorporate functions while confirming quality, rights, corporate use, and safety. This caution is a strength for large companies but can appear "slow" to individual users.

Third, the possibility that AI might encroach on existing businesses like Adobe Stock. Stock photos and material sales are areas where demand structures can easily change due to generative AI. If users start generating necessary images instead of purchasing materials, part of the existing revenue will be pressured. Adobe is trying to compensate for this with the monetization of Firefly, but investors are still assessing whether that replacement is sufficient.

Nevertheless, Adobe has assets that are not easily replicated by other companies. Photoshop is not just an image editing software but a standard environment deeply embedded in professional production sites. Illustrator remains strong in logo, print, packaging, and vector production. Premiere Pro and After Effects continue to be used in video production environments. Acrobat is close to the foundation of business documents. Few companies can integrate AI across these.

The success or failure of Adobe in the AI era depends more on "how naturally AI can be integrated into work" than on "the performance of generative AI itself." Simply adding an AI button is not enough. Professionals seek AI that brings them closer to deliverable quality, not just AI that creates drafts. Protecting brands, safeguarding rights, adjusting details, sharing within teams, and deploying across multiple media. Only when these are achieved will companies pay extra for AI.

From this perspective, the future of Adobe is not all bleak. Rather, with the spread of generative AI, the amount of content created worldwide will increase. Social media ads, videos, e-commerce product images, presentations, internal documents, educational content, visuals for customer support. Every company will be pressed to create content "more, faster, and cheaper." In this flow, if Adobe can cover everything from production to management, distribution, and analysis, AI will not be a threat but fuel for demand expansion.

However, for investors, the timeline is important. Even if Adobe becomes a winner in the AI era, it may not be reflected in the numbers in the coming quarters. While the market places high expectations on AI-related companies, it sells harshly if growth rates slow even slightly. Adobe's evaluation wavers between the stability of a mature company and the expectations of an AI growth company.

In conclusion, Adobe is not a company that can remain unscathed by AI. Generative AI will undoubtedly shake some of its businesses, putting pressure on pricing power and growth rates. However, few companies can integrate AI as deeply into existing workflows as Adobe. If Firefly, Adobe Express's AI assistant, and cross-application agent AI become established in practice, Adobe could be re-evaluated not as a "tool replaced by AI" but as a "platform dominating the production scene in the AI era."

The question now is not whether Adobe can survive in the AI era. More precisely, it is whether Adobe can transform AI from a "feature addition" to a "new revenue engine." The divided reactions on social media are because that answer has not yet been fully proven in numbers. What investors should look for in the next earnings report is not flashy AI demos. It's how much net new ARR, Firefly monetization, transition to AI plans, and the reasons professional users hold onto Adobe have strengthened.

Adobe's trial began with generative AI. However, Adobe's counterattack has also begun with generative AI.


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