Overview
- Morgan Stanley downgraded Adobe to Underweight with a $240 price target and cut Salesforce to Equal-weight with a $185 target on Tuesday, and both stocks slid in premarket trading.
- The bank said Adobe’s strong AI usage and recent Topaz Labs acquisition have not yet produced faster revenue and cited the company’s shift to freemium pricing and CEO and CFO transitions as execution risks.
- Morgan Stanley said Salesforce’s engineering metrics are strong but that its Agentforce AI tools need to show they can raise subscription revenue enough to offset weakness in legacy segments such as Commerce and Tableau.
- The firm also cut Workday to Underweight with a $145 target, started Intuit at Equal-weight with a $335 target, and listed Microsoft, Palo Alto Networks, CrowdStrike, Cloudflare, Datadog, ServiceNow, Snowflake, and Shopify as preferred sector picks.
- The report sharpens what investors will watch next: proof of AI‑driven ARR growth, clear monetization metrics from new AI products, and successful integration of acquisitions as triggers for any valuation recovery.