HSBC cautious on Adobe, flags headline risk from free software clone

Investing.com -- HSBC downgraded Adobe to Hold from Buy and cut its price target for the company’s shares to $267 from $310 in a note Tuesday morning, citing headline risks from a free open-source clone of its Creative Cloud suite.

Stephen Bersey, HSBC’s head of U.S. technology research, pointed to media reports that ArtCraft, apparently a firm of just a few people, has released what he believes is an auto-coded free clone of Adobe’s software, including versions of Photoshop, Illustrator, Premiere and Acrobat.

ArtCraft said it hopes to reach “100% feature parity” with Adobe’s software within a month.

Bersey distinguished auto-coding from professional vibe coding, where a human reviews code before it is committed. Auto-coding hands full control to the model with minimal human oversight.

“We see many dangers attached to auto-coding projects from both a security, legal, going concern and maintenance perspective, and see this more impacting ‘freemium’ and open source enthusiasts for the time being,” he wrote.

He advised avoiding the download, noting that open-source code allows AI to identify hacking exploits.

Even so, HSBC cut its revenue estimates by about 1% and its non-GAAP earnings estimates by 1% to 2%, to reflect the risk that some amateur retail users migrate away.

Adobe trades at nine times estimated 2027 non-GAAP earnings, against a sector median of 20.7 times. Bersey said that discount is warranted, as he has identified Adobe as “a realistic candidate for AI-led disruption.”

Original Article

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