AI Threatens Big Software's Future: Adobe, Salesforce, Intuit, and Workday Take a Beating

Shares of software companies have declined sharply, with Adobe down 23.9% this year, as investors worry about the impact of AI on traditional software interfaces. Analyst Ben Reitzes downgraded Adobe to sell, citing the rise of AI-native entrants and tech behemoths investing heavily in AI. Other software companies such as SAP, Nemetschek, and Salesforce also experienced significant declines.

Shares of software companies have experienced a sharp decline this year, with Adobe down 23.9% [1]. Investors are increasingly concerned about the potential impact of artificial intelligence (AI) on traditional software interfaces. Analyst Ben Reitzes downgraded Adobe to "sell," citing the rise of AI-native entrants and tech giants investing heavily in AI [1]. Similar declines have been observed among other software companies such as SAP, Nemetschek, and Salesforce.

The software industry is witnessing a significant shift towards AI integration, with major players like Adobe and OpenAI leading the charge. Adobe, a leading software company known for its creative, marketing, and document management solutions, has been navigating this evolving landscape by strategically focusing on AI integration and product innovation [2]. The company reported strong financial results for the second quarter of fiscal year 2025, with revenue reaching $5.87 billion, representing an 11% year-over-year increase [2]. However, the stock has faced headwinds due to concerns over the impact of AI on its traditional revenue streams.

Anthropic, a competitor in the AI space, has also been making inroads by offering its Claude for Government product to all three branches of the U.S. government for $1 per agency for a year [1]. This move underscores the growing competition for government contracts and the strategic importance of AI in public sector applications. OpenAI, another major player, announced it will give its ChatGPT Enterprise product to U.S. federal agencies for $1 through the next year [1]. These developments highlight the fierce competition among AI companies for government contracts and the potential for AI to disrupt traditional software markets.

Adobe's response to these challenges has been multifaceted. The company has been integrating AI capabilities across its product portfolio, particularly through its Firefly generative AI platform, which has shown strong adoption among users [2]. Adobe's AI-influenced Annual Recurring Revenue (ARR) is estimated at $3.5 billion, with substantial contributions from Firefly Services and Acrobat AI Assistant [2]. Despite these efforts, Adobe faces increasing competition, particularly from emerging players like Canva and Figma [2]. These competitors have gained traction among younger users and organizations, potentially challenging Adobe’s market share in the non-professional segment.

Adobe's long-term revenue target of $30 billion underscores its ambitious growth plans. The company is focusing on several key areas to achieve this goal, including expanding its presence in the enterprise market, leveraging AI to enhance creative workflows, and integrating Adobe Express with Acrobat to penetrate the Document Cloud install base with Creative Cloud solutions [2]. These strategies aim to capitalize on Adobe’s comprehensive offerings and position the company for sustained growth in an increasingly competitive landscape.

In conclusion, the software industry is undergoing a significant transformation driven by AI integration. Companies like Adobe are responding by investing in AI capabilities and diversifying their product offerings. However, the industry faces significant challenges, including competitive pressures and the potential for AI-driven products to cannibalize traditional revenue streams. As the market evolves, investors will need to closely monitor the performance of these companies and their ability to adapt to the changing landscape.

References:
[1] https://www.cnbc.com/2025/08/12/anthropic-claude-government-ai.html
[2] https://in.investing.com/news/-4965728