RBC Capital's AI-Ready Software Thesis: Figma's Position on the Design S-Curve

The macro tailwind for AI-integrated software has finally solidified. For much of the past year, investors questioned whether corporate budgets would match the hype. A new survey from RBC Capital suggests that moment is now arriving. 90% of CIOs plan to spend more on AI in 2026, with a striking 90% also creating new, dedicated budgets for generative AI and LLM projects. This isn't just budget reallocation; it's additive spending, signaling a stabilization in enterprise tech budgets that has been long awaited.

This shift is more than a spending increase; it's a fundamental change in purpose. Use cases are expanding beyond experimentation. Seventy-six percent of CIOs now target both cost savings and revenue generation with their AI strategies. The focus is moving decisively from cutting expenses to driving new growth. For software companies, this creates a powerful inflection point. The technology is no longer a novelty but a competitive mandate, and the budget is following.

Viewed through the lens of the technological adoption S-curve, we are witnessing the steep climb of the early majority. The survey shows 60% of respondents are already in production with AI initiatives, a significant jump from the previous year. This acceleration sets the stage for the core strategic question of the era: is AI a productivity tool or a paradigm that makes legacy applications obsolete? The answer will determine which software companies ride the next exponential wave and which get left behind.

Figma's Infrastructure Play on the Design S-Curve

Figma's recent financial milestone is a clear signal that it has crossed a critical threshold. In the third quarter of 2025, the company crossed a $1 billion annual revenue run rate, driven by a robust 38% year-over-year increase. This wasn't just a beat; it was a validation of its core model. The company is now projecting full-year revenue of $1.044 to $1.046 billion, representing 40% growth. This acceleration is the financial proof point that design-led thinking is becoming a fundamental business imperative.

The strategic pivot to own the AI design workflow layer is where the paradigm shift becomes tangible. Figma is no longer just a tool; it is building an open AI canvas. The company has moved beyond single integrations to a multi-model strategy, integrating Gemini 3 Pro with Nano Banana Pro and collaborating with OpenAI to launch a dedicated Figma App for ChatGPT. This creates a powerful network effect. By giving users the flexibility to choose models like Seedance or Sora for specific tasks, Figma lowers the barrier to entry for AI while raising the ceiling for creative output. The result is a platform that becomes more valuable with each new integration, locking in users and developers.

This move aligns perfectly with Figma's broader vision of design as infrastructure. As the CFO notes, companies across every sector have become more "software-defined". In this world, design quality is a primary competitive differentiator. Figma's AI-native features, like Figma Make, are designed to accelerate workflows, letting project managers or researchers move ideas forward without waiting on a designer. This isn't incremental improvement; it's a fundamental redefinition of the design process, making it more accessible and efficient. The company's net dollar retention rate of 131% for its largest customers shows they are not just using these tools-they are building their product development around them.

The bottom line is that Figma is positioning itself as the foundational layer for the next generation of product creation. It has achieved the scale to matter, and it is now building the AI-powered rails that will define the workflow. For investors, the question is whether this infrastructure play can sustain its exponential growth trajectory as AI spending stabilizes. The early signs are strong, but the company's ability to maintain its 131% retention while scaling its AI suite will be the true test of its paradigm shift.

Valuation vs. Exponential Adoption Trajectory

The market is now grappling with a classic tension for a company on an S-curve. Figma has crossed the $1 billion revenue threshold and is scaling its AI suite, but the stock price reaction to analyst coverage suggests the exponential growth story is already being priced in. In early January, RBC Capital slashed its price target to $38 from $65, maintaining a Sector Perform rating. The firm's core argument is that much of the excitement about Figma's future is already packed into its stock price. This isn't a bet against the company's fundamentals, but a recognition that the most optimistic adoption scenarios may be reflected in the share price.

The stock's immediate slide under $74 on the day of the coverage launch is a textbook example of a valuation speed bump for a growth stock. When a company hits a major inflection point, as Figma has with its AI canvas, the market often gets ahead of itself. The result is a setup where even strong quarterly results can fail to move the needle, as the bar for "good news" has been raised to near-perfection. This volatility is the risk premium for investing in the infrastructure of a paradigm shift.

So, what metrics will determine if the current valuation is justified or if the stock has room to run? The key is to watch the weekly adoption rate of AI features among high-value customers. The company reports that approximately 30% of high-value customers are now using Figma Make every week. This is a powerful signal of embedded workflow change. The next phase will be whether this rate accelerates as more features like the ChatGPT integration and multi-model support become routine. A rising weekly adoption rate among the largest spenders would prove the AI layer is becoming indispensable, not just a nice-to-have.

Equally important is the expansion of the AI canvas ecosystem. Figma's strategy of integrating multiple models-from Gemini to Nano Banana Pro and collaborating with OpenAI-is designed to lock in users by making the platform the central hub for AI-powered creation. The growth of this ecosystem, measured by new integrations and developer activity, will dictate whether the company can sustain its net dollar retention rate of 131% as it scales. If the AI canvas becomes the de facto standard for design-led product development, the current valuation may look conservative. If adoption stalls, the stock could face continued pressure. The coming quarters will show which path the company is on.

Catalysts and Risks on the Adoption Curve

The path from a $1 billion run rate to the next exponential leap hinges on a few critical near-term events and structural risks. The primary catalyst is the continued expansion of the AI canvas itself. Figma's multi-model strategy-integrating Gemini 3 Pro with Nano Banana Pro, collaborating with OpenAI, and acquiring Weavy to support models like Seedance and Sora-is designed to lock users into its platform. The key metric to watch is the weekly adoption rate of these AI features among high-value customers. The company reports that approximately 30% of customers spending $100,000 or more in ARR were using Figma Make weekly by the end of September. The coming quarters will show if this rate accelerates as more integrations become routine, proving the AI layer is becoming indispensable for design-led product development.

The primary risk is that AI's impact on design workflows is slower than anticipated, failing to drive the expected revenue acceleration. This is the core of the valuation tension. If the adoption curve flattens, the stock's premium could compress. The risk is not just about feature usage but about workflow transformation. For AI to be a true paradigm shift, it must move beyond assisting designers to enabling non-designers-project managers, researchers, or product owners-to create and iterate. The company's net dollar retention rate of 131% for its largest customers is a strong signal of embedded value, but it must be maintained as the AI suite scales. Any slowdown in expansion within this cohort would be a red flag.

Finally, investors must watch for stability in enterprise spending in the first quarter of 2026 and any shift in CIO priorities away from design software innovation. The broader macro tailwind is clear, with 90% of CIOs planning to spend more on AI in 2026. However, the RBC survey also notes that 2026 will be a year of divergence for the software sector. Companies strategically positioned for AI adoption will see growth, while others may struggle. Figma's position as a design infrastructure layer is strong, but if CIO budgets shift toward core AI infrastructure or other enterprise applications, the growth trajectory for its AI canvas could face headwinds. The coming Q1 earnings will be a key test of whether the stabilization in enterprise spending translates directly into accelerated adoption for AI-powered design tools.