Jefferies downgrades Adobe, upgrades IBM as AI reshapes 2026 software outlook

Investing.com -- Jefferies has shifted its software recommendations for 2026, downgrading Adobe to Hold while upgrading IBM to Buy, as analysts warn that investors may “need to stay patient” for meaningful AI-driven revenue acceleration.

The moves come from the firm’s latest note, headed by analyst Brent Thill, which urges investors to remain selective as “growth decelerates and lags versus other sectors like semis.”

Jefferies downgraded Adobe because “any contribution boost from AI has yet to show up,” noting that topline trends have been decelerating since fiscal 2023 and through Adobe’s fiscal 2026 guidance.

While the firm acknowledges that Adobe has made “significant progress with AI features since Firefly was announced in early 2023,” analysts argue that there is still “no AI inflection,” adding: “We do not see acceleration in total revs during our forecast period to FY30.”

Jefferies also cites investor concerns about long-term disruption to Adobe’s business model.

In contrast, Jefferies upgraded IBM to Buy, citing a clearer path to software momentum.

Thill says IBM is “rebooting software growth in ’26,” driven by Red Hat strength and synergies from recent and pending acquisitions, including HCP and Confluent.

The analyst writes that these deals “pave a clearer path to accelerated software growth,” while also enhancing IBM’s hybrid cloud and data capabilities.

Mainframe resilience and potential gains from generative AI monetisation through watsonx further support the upgrade, Jefferies says, arguing that operating leverage and synergy realisation should bolster margins and free cash flow heading into 2026.

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