Adobe slips on back of HSBC downgrade

Adobe (ADBE) shares slipped fractionally in premarket trading on Tuesday after HSBC downgraded the enterprise software firm, citing artificial intelligence-coded clones.

"We note media reports that ArtCraft (apparently a firm of just a few people) has released what we believe to be an 'auto-coded' free open source clone of Adobe’s Creative Cloud suite, including versions of Photoshop, Illustrator, Premiere, Lightroom, Acrobat, After Effects, and InDesign," HSBC analyst Stephen Bersey wrote in a note to clients. "ArtCraft said it hopes to reach '100% feature parity' with Adobe’s software within a month. We note that whereas professional ‘vibe coding’ is more of a human/model partnership where code is co-developed and the human reviews/knows/understands what is being written prior to committing, auto-coding is more giving full control to the model to inspect, create, and commit code unsupervised, with no/minimal human reviewing/knowing/or even understanding what is going on underneath the display screen. Thus, we see many dangers attached to auto-coding projects from both a security, legal, going concern and maintenance perspective, and see this more impacting 'freemium' and open source enthusiasts for the time being."

Bersey lowered his rating on Adobe to Hold from Buy and cut his price target to $267 from $310.

In addition to being open source, Bersey said there is the risk that AI can see the source code and come up with zero-day hacking exploits, so he advised against downloading ArtCraft. However, the news nonetheless creates headline risks for Adobe, he added.

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