Adobe struggles to assure investors that it can thrive in AI era (www.mercurynews.com)

At its annual conference for 10,000 creators, Adobe tried to reassure users and investors that its creative suite can thrive in a generative-AI era — but markets remain unconvinced. Shares are down about 25% this year amid fears that fast-moving AI tools from Google (Veo), OpenAI (Sora) and consumer platforms like Canva are eroding Adobe’s professional franchise and putting “structural AI-driven competitive and pricing pressure” on its business. CEO Shantanu Narayen argued the company is undervalued, but analysts point to rapid adoption of third‑party generative tools and a slower-than-expected enterprise AI cadence for broader software peers. Technically and strategically, Adobe pivoted from an exclusive reliance on its Firefly models to a hybrid approach: integrating third‑party models (Google, OpenAI) into apps like Photoshop and effectively reselling model capacity while still developing Firefly for publish-ready, safety-conscious workflows. AI-first products currently generate ~$250M/year, and Adobe claims roughly $5B in “AI‑influenced” revenue when counting price/retention effects. For the AI/ML community this highlights two trends: commoditization of core generative capabilities (creating opportunity for model providers and marketplaces) and renewed emphasis on differentiation via safety, IP provenance, integration UX and pricing strategies.