TLDRs:
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Adobe shares dip again as AI concerns and interest rate uncertainty rattle investors
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Broader software sector weakness drags tech stocks lower with S&P 500 down 2.7 percent
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Investors focus on March 12 earnings call to gauge AI growth and strategy
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Upcoming U.S. inflation data could sway rate expectations and affect market sentiment
Adobe Inc (NASDAQ: ADBE) experienced another downward move on Thursday, with shares slipping roughly 1.4% to $253.66 as of mid-afternoon trading.
The stock fluctuated between $251.23 and $261.75 during the session, marking a continuation of recent volatility in software equities. Investors have been increasingly cautious about software stocks, balancing optimism around AI innovation with skepticism over potential disruptions and uncertain interest rate trends.
The selloff comes amid broader weakness in the software sector, with the S&P 500 software and services index falling approximately 2.7% on Thursday. Analysts point to rising concerns over AI-related spending, particularly following heightened capital expenditures from major tech companies.
“We see this as a ‘prove it’ year for AI,” noted Jack Herr, a senior investment analyst at GuideStone Funds. “We need to start seeing some return on investments.”
Sector Struggles Amid AI Hype
The pressure on Adobe is part of a wider industry trend, as AI developments have created both excitement and unease. Anthropic’s rollout of plug-ins for its Claude Cowork agent sparked notable selling, illustrating the market’s sensitivity to AI-related news. The S&P 500 software and services index is down roughly 15% since late January, highlighting the broader retrenchment in the sector.
Portfolio strategist Garrett Melson from Natixis Investment Managers Solutions remarked, “You’ve clearly seen that breakdown in terms of the monolithic AI trade.”
Even with strong earnings, software companies are finding it difficult to counter the prevailing narrative of uncertainty and cautious sentiment.
Investor Skepticism Persists
Adobe’s stock performance reflects deeper skepticism among investors about whether AI features can drive meaningful top-line growth without compressing margins. The stock has now fallen nearly 45% from its 52-week high of $465.70, reached in February 2025. Volume surged to 7.7 million shares, significantly above the 50-day average, signaling that market participants are actively trading on fear rather than long-term fundamentals.
Bankers and analysts have described the current multiple compression as unsustainable. Wally Cheng, Morgan Stanley’s global tech M&A chief, noted that deal activity in the sector has been tempered by valuation swings and investor caution.
Eyes on Earnings and Economic Data
Looking forward, Adobe’s first-quarter fiscal 2026 results, scheduled for March 12, will likely serve as a key catalyst. Investors are expected to focus on guidance, pricing strategies, and AI monetization plans rather than raw earnings numbers alone. Market participants are also keeping a close watch on Friday’s U.S. Consumer Price Index report. A hotter-than-expected reading could push bond yields higher and extend expectations of steady rates, while a cooler print might ease some pressure on tech stocks.
In the meantime, the software sector continues to navigate choppy waters. With AI hype and macroeconomic uncertainty dominating the narrative, momentum can shift rapidly, making near-term stability elusive. For Adobe, March’s earnings call may offer a clearer picture of how its AI investments are translating into tangible results and whether the stock can find a footing in a cautious market environment.
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