HSBC analyst Stephen Bersey downgraded Adobe (ADBE) shares to “Hold” and lowered his price objective to $267, which nonetheless signals a potential upside of about 12% from current levels. Adobe stock has underperformed in 2026, dropping approximately 30% since the start of the year, with new headwinds threatening to hinder a meaningful recovery in 2027.

The downgrade follows reports that startup ArtCraft released free, open-source alternatives to Adobe’s core Creative Cloud applications, including Photoshop, Illustrator, Premiere, Lightroom, Acrobat, After Effects, and InDesign. While ArtCraft’s goal to achieve full feature parity within a month remains a declared ambition rather than a proven milestone, the analyst reduced his earnings estimates to account for potential user churn among non-professional creators.

Bersey noted that while immediate commercial risks for professional enterprise clients remain limited due to security, legal, and maintenance concerns surrounding open-source software, the emergence of a free alternative adds pressure on Adobe. The key risk is that advances in AI make competing tools easier to build, challenging Adobe’s ability to retain paying users over time.

Overall, Wall Street remains cautious on the software giant’s outlook for the remainder of 2026. The consensus rating on Adobe sits at “Hold,” with a mean price target of $269, indicating a potential upside of approximately 13% from present trading levels.