TechJul 9, 2026
AI Is Splitting Design Software Into Winners and Losers
Platform Dynamics
Rhea Lobo
Discover
Design software is fracturing under the weight of AI disruption. Analysts at two major banks have drawn a sharp line between platforms that can monetize the shift and those likely to lose users to cheaper AI-native tools. The divergence is already showing up in analyst ratings, price targets, and stock performance.
Adobe has dropped ~37% in 2026. Bank of America analyst Tal Liani reinstated coverage with an Underperform rating and a $190 price target, arguing the company is "fundamentally challenged."
His concern is that generative AI increasingly delivers "good enough" creative output at low or near-zero cost, threatening the casual and occasional users who make up a chunk of Adobe's subscriber base.
The problem is not that Adobe has ignored AI. AI sits on top of a business still built on per-seat subscriptions. Liani projects revenue growth decelerating from 10.5% in 2025 to 8.8% in fiscal 2027, with no clear catalyst to reverse that trajectory.
Adobe's CEO announced plans to step down in March, and the CFO departed for Marvell in June, adding leadership uncertainty to an already difficult setup.
Not everyone agrees the stock is a trap. Baptista analyst Ishan Majumdar points to record quarterly revenue of $6.62B in the fiscal second quarter and AI-related annual recurring revenue now above $500M.
He argues Adobe's AI tools are embedded in enterprise workflows across Creative Cloud, Acrobat, and Digital Experience, giving them a monetization path standalone AI apps lack.
Even Majumdar acknowledges investors are still debating whether AI expands Adobe's competitive moat or slowly erodes it.
Figma has fallen ~44% in 2026, but BofA's Liani sees a fundamentally different situation. He assigned Figma a Buy rating with a $30 target, arguing the platform's role in enterprise collaboration is harder for AI to replace.
Figma sits at the coordination layer, where AI-generated designs get stitched into production-ready products. Individual tasks at the start of a design project may go to AI tools, but enterprises still need Figma to bring those outputs together.
Figma has also built a usage-based monetization layer directly into that dynamic. Customers pay per seat and receive an allocation of AI credits.
If they exceed the limit, they pay more. More than 75% of enterprise users who hit their credit cap in the first quarter kept buying additional credits. Paid users reached 690,000 at the end of the quarter, up 53% year over year.
Citi initiated coverage earlier with a Buy and $36 target, suggesting the stock could double from its June levels. Analyst Tyler Radke projected Figma's total addressable market could reach $50B by 2029, roughly double its estimated size last year, driven by AI expanding the pool of potential users.
Figma is also moving aggressively to own more of the product development stack. It acquired the team behind Bud, a Y Combinator-backed vibe-coding and AI agent platform. The company recently released its own Make tool for building web apps and integrated with Codex and Claude Code.
One design-adjacent name has avoided the AI disruption narrative entirely. Cadence Design Systems makes electronic design automation software, the tools chip engineers use to design semiconductors. It is up ~23% in 2026, compared to the S&P 500's ~8.6% gain.
Cadence recently expanded its partnership with Intel Foundry on Design Technology Co-Optimization for Intel's 14A process node. First-quarter revenue grew 19% year over year to $1.47B, beating estimates.
AI is changing who creates, who pays, and where the value sits. For investors, the biggest winners may be the platforms that become part of the workflow rather than those trying to defend the old one.
