Is Adobe faking it or being impacted by Figma?

The AI applications in the US stock market have already produced several big winners, such as APP, Palantir, and META, all of which have benefited greatly from the AI wave. However, the path of AI applications for some giants has not been smooth.

Text-to-image technology has become increasingly mature, significantly enhancing the efficiency of visual design. However, the visual design software giant Adobe is in trouble, with its market value halved against the backdrop of a 40% rise on NASDAQ over the past two years. Palantir, with a revenue of $4 billion, has a market value that is three times that of Adobe, which has a revenue of $20 billion.

Once a high-flying benchmark in SaaS, Adobe now only has a PE ratio of 20 times. Following the failed acquisition of Figma, its market value has doubled compared to the acquisition valuation, making Adobe's situation even more awkward.

In the graphic design sector, Canva is rapidly catching up. Although Adobe has launched its own Firefly for AI-generated images, the revenues of competitors like Midjourney are actually comparable. Various large models also provide text-to-image services, and Adobe can no longer maintain its leading position in this functionality.

In the field of text-to-video, breakthroughs are imminent. After Google's Genie3, more creativity will emerge, and the efficiency of video creation has been greatly improved. Although, like AI-generated images, AI-generated videos still require professional software for refinement, Adobe's functionalities have been diminished. Especially since these text-to-image and text-to-video technologies were not originally developed by Adobe, the company is merely a follower in the rapid technological race of the industry.

Adobe may not necessarily be falling apart, but given that its performance continues to grow and there has not yet been any customer loss, there is still an opportunity for bottom-fishing. Assuming that text-to-image and text-to-video functionalities become ubiquitous, Adobe's lagging behind may not be a major issue. Based on its secondary editing professional ecological niche, while other companies can handle large models, they may not be able to manage professional visual design functionalities, allowing Adobe to maintain a relatively high position in the industry.

However, aside from this scenario, what other hidden dangers does Adobe face?

1. Long-term valuation logic damage

In terms of performance, Adobe is naturally not as dazzling as other popular AI companies, but looking at the growth rate, there are no major issues. In Q1 2025, both revenue and remaining performance obligations (RPO) maintained a growth rate of around 11%. Many SaaS companies that are not closely related to AI are actually experiencing a slowdown

The company has slightly raised its full-year performance expectations.

In terms of growth, media design is greater than digital business. The media design business includes visual design such as PS, PR, and PDF reader Acrobat. The digital business refers to the company's web design software Experience.

The company pointed out that although the AI drawing feature Firefly has low revenue, its penetration rate is very high, with 78% of users utilizing it. This indicates that generative AI has become a necessity in visual design. Based on Adobe's position, integrating this feature into PS does not differ significantly from competitors, and Firefly does not charge high fees, so customers have little need to use two software, such as Midjourney followed by PS.

Companies providing text-to-image services do not possess good secondary design editing capabilities. In commercial use, it is almost impossible to complete a text-to-image task in one go; fine-tuning details is essential.

The hint given by the company is that Firefly is not falling behind; on the contrary, it is quite popular. With such high stickiness and potential, if priced similarly to PS in the future, revenue could surge. However, this aspect cannot be overly optimistic, as currently, everyone is offering it for free, and Adobe's products are far from being good enough to justify a significant price increase. Meanwhile, other companies are also striving to enhance secondary editing capabilities in text-to-image functions to improve usability and commercial viability. As long as the technology and final workflow paradigm in the text-to-image industry remain unsettled, the expectation of market share decline will continue to accompany Adobe for a long time.

Small companies are expected to gain market share, thus increasing their valuations, while Adobe is expected to lose market share, which suppresses its valuation. This creates an imbalance in the stock market, but for large companies in long-term monopolistic industries, the situation is indeed harsh.

Adobe's PDF reader Acrobat has also been AI-enabled, significantly enhancing its functionality, but it has not translated into revenue growth. Other large models can also handle PDF tasks without charging fees.

It is worth noting that competitors originating from the professional image design field rather than text-to-image functions, such as Canva, continue to maintain a higher growth rate. In 2024, its market share is 1/20 of Adobe's, but it has maintained a 30% growth rate in 2025, indicating that Canva's market share is still rapidly increasing.

![](https://mmbiz-qpic.wscn.net/sz_mmbiz_png/qITsrV4iaRiaxdKpvicXxwv4TC8HJGqDMIXYFCWg68kkyT5Tfa1m4onbw7IID9HeYvDUjbmiazx13ibCaiaCMseyRWZA/640? Canva's professionalism is naturally not as strong as Adobe's, but the problem is that many commercial visual design needs are also mostly unprofessional. Compared to Adobe, Canva has a lighter operating environment and is easier to use, while also offering quality production AI tools. In the long run, Canva will be Adobe's biggest competitor. Before the growth rates of the two converge, this is likely to be a new factor suppressing valuations.

Interestingly, after Figma went public and surged, Canva may follow suit and go public, leading to a bubble contagion phenomenon. For example, Figma's highest market value reached $60 billion, while Canva's performance is comparable to Figma, with Canva's various indicators almost three times better. According to the same valuation method, it wouldn't be difficult for Canva to be valued at $200 billion upon going public, but the problem is that Adobe's market value is currently only $140 billion.

This reflects the madness of the current bull market in U.S. stocks. But it also indicates that Adobe is very cost-effective in the long run. There are just two factors that have been suppressing its valuation, but as long as its market share doesn't decline and the growth rate with Canva doesn't widen too much, with quarterly performance disclosures, Adobe's valuation can easily return from 20 times to a long-term 30 times.

2. The Battle of Figma is Not the Focus

Next, looking at the hot Figma, saying it will fully impact Adobe is a bit exaggerated because the size difference is too large. However, Figma has indeed taken over Adobe's XD software and dominates the web or program UI design track.

This track is a sub-sector of visual design and is not large. Figma's innovation lies in its platform running without the need for local software installation, operating instead on the web, and emphasizing multi-person collaboration in the process. In contrast, Adobe's XD is somewhat more complicated.

What truly gives Figma its competitive edge is its ability to generate code through graphics, meaning that to build a webpage, one only needs to design images and logic to complete tasks without coding, whereas traditional design still requires code first, then loading materials Therefore, Adobe's XD is somewhat of an old relic. Now, XD has basically given up on competition.

However, it's okay to lose in this race, after all, Adobe is a large company with many other businesses. Web UI design is essentially a form of light visual design, which doesn't require the rich features derived from Photoshop; what is needed more is that the tool is user-friendly.

Adobe once hoped to acquire Figma for $20 billion, but clearly, after the acquisition, it would dominate the market, and antitrust regulations would not allow it. Theoretically, Adobe's offer was quite sincere.

What we see now is that Figma has completed its impact on the UI design track, and it will be quite challenging for Figma to seize other software functionalities from Adobe. After all, under Canva and Figma, they have already captured a significant portion of non-professional visual design business.

At the same time, Figma is not without its worries. This type of lightweight, no-code website development tool has given rise to more innovative companies with the development of large models, such as Lovable, a no-code website building tool. This product has only been established for a year, and its ARR growth rate is already among the top in all SaaS.

Compared to Figma, Lovable may not be as strong in visual design, but this type of tool has stronger coding capabilities, emphasizing the production of web pages with a single line of text, even skipping the step of visual design with images. Figma seems a bit clumsy in comparison. This follows the same logic as other companies challenging Adobe: providing a user-friendly experience for the general public, without being overly professional. It seems that the new waves push the old waves forward, and Figma's future also faces considerable challenges

III. The Real Issue

For Adobe, the main issue currently is insufficient growth, both in terms of revenue and profit. This problem is caused by unfavorable competition, but it is not a sudden occurrence; rather, it stems from the inability of a large company like Adobe to maintain market share while charging high fees and profits in innovative, low-specialty areas.

However, the U.S. stock market this year is not lacking in major players, and being a monopoly or having a large scale is not the reason for stagnation, as seen with Meta. The key is how to leverage AI to promote revenue and profit growth. If Adobe can restore its growth rate to 20%+, a takeoff is inevitable.

Like other AI application companies, Adobe is also burning a lot of computing power, but it has not translated into growth. One reason is that the customer base has not increased; compared to the development of Figma and Canva, Adobe is in a state of losing mass customers. For long-term growth, the company relies on a stable number of professional users and aims to increase average selling price (ASP) through coordinated sales to generate revenue.

This actually implies that the company is hinting at increasing charges for Firefly and charging for AI video features, but this path will only narrow further, allowing competitors to thrive and have more motivation to explore professional businesses. Therefore, Adobe still needs some changes, such as exploring better pricing models:

In the past, transitioning from one-time software purchases to SaaS subscription payments was a major innovation in the software industry. However, in the AI era, subscriptions are not everything. AI monitoring can be more precise, allowing for payment based on operational depth and time, accurately pricing professional and non-professional users. For instance, large models do not charge by the day but by TOKEN, which is a form of precise pricing. Fine pricing based on the frequency of software function usage can actually help Adobe, which is facing a narrowing path, to regain new life.

I previously mentioned a viewpoint that successful AI application companies all have their own unique and powerful small models; Palantir does, and Applovin does as well. Meta seems to be constantly working on large models, but its revenue and profit growth also relies on optimizing advertising efficiency, which is essentially similar to Applovin, using precise advertising small models. For Adobe, if its team cannot lead in AIGC models, it can only rely on precise pricing models to win. If everyone has the same features, there is no expectation of maintaining high prices and high market share.

Additionally, it is noted that Adobe's profit margin has not improved in this wave. While the gross margin is already high and cannot change much, the sales expense ratio remains high. Utilizing AI to enhance sales efficiency is crucial, as Meta has managed to achieve revenue growth while reducing sales expenses, and this internal control is unrelated to industry technology trends This also indicates that Adobe has not deeply integrated AI internally, which may be the company's true future.

Conclusion

For Adobe, which is worth 140 billion, it is not difficult to increase many times, as there are precedents. However, the problem is that the company's level of AI integration is insufficient, and AIGC technology is not at the forefront of the industry. Yet, its accumulation of specialized secondary editing functions provides a significant margin for error. As long as it can find some exclusive small models, whether in product pricing or internal control, it can make a comeback.

For example, precise product pricing or improving product marketing efficiency can immediately reverse revenue and profit growth. However, the reality is that this has not been achieved, so the valuation will remain suppressed until the text-to-image and text-to-video models are settled. Adobe remains a company where no transformation means no major turnaround.

This is indeed the Hong Kong stock circle. Original title: "Is Adobe faking it or being impacted by Figma?"

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