BofA Prefers Figma Over Adobe in AI Race

In a note from BofA Securities, analyst Tal Llani assigned Figma (not yet publicly traded) a Buy rating with a $30 price target, while downgrading Adobe (ADBE) to Underperform with a $190 target. This divergence reflects Llani's view that Figma holds a stronger competitive edge in artificial intelligence.

Rating Change

• Figma: Buy (new) – Price target $30.
• Adobe: Underperform (from Neutral) – Price target $190 (down from $250).

Analyst Rationale

Llani believes Figma's collaborative design platform gives it an advantage in deploying advanced AI tools, making it more attractive to users compared to Adobe, which faces challenges integrating AI into legacy products like Photoshop and Illustrator. He also noted that Adobe's current valuation does not fully reflect rising competitive risks.

Context

The recommendation follows Adobe's disappointing quarterly results, which sent the stock down about 15% over the past month. Meanwhile, Figma is preparing for an IPO amid growing investor interest in AI companies. Other analysts, such as those at Morgan Stanley, remain Neutral on Adobe with a $220 target.

What to Make of It

BofA's call highlights a shift in analyst preference toward smaller, AI-focused companies. Investors should monitor Adobe's AI integration progress and Figma's IPO performance to assess opportunities.