Adobe Drops 29% YTD: Should You Buy, Sell or Hold the Stock?

Adobe ADBE shares have dropped 29.1% year to date (YTD), underperforming the broader Zacks Computer and Technology sector's return of 17.5%. The weakness appears to reflect investor concerns over intensifying competition from AI-native creative platforms, uncertainty surrounding AI monetization, modest recurring revenue growth, pressure on profitability and leadership transition risks. The company has been playing a catch-up role in the AI domain, not only against established players like Microsoft MSFT, Alphabet GOOGL and Salesforce CRM, but also from AI-native companies like OpenAI, Midjourney and Canva. YTD, Adobe shares have underperformed Alphabet's 9.3% drop, Salesforce's decline of 12.8% and Microsoft's appreciation of 9.7%.