Shares of Adobe (ADBE) experienced a downturn on friday,despite teh software company exceeding Wall Street’s projections for its quarterly performance and raising its outlook for the year.

The stock’s performance placed it among the bottom performers in the S&P 500, with a roughly 5% drop bringing it to nearly $392 by close, a 12% decrease year-to-date.

Morgan Stanley analysts noted the central question for investors remains the potential of AI innovation to substantially influence the company’s trajectory. They stated the recent quarter provided little reassurance regarding AI’s contribution to accelerating growth,suggesting that bullish investors may need to wait for more concrete AI metrics to drive positive change.

“Expect the stock to remain range-bound until the company demonstrates more tangible success from AI.”

Despite this, Morgan Stanley maintains an “overweight” rating on Adobe, setting a price target of $510, anticipating increased monetization of Adobe AI in the coming fiscal year.

Jefferies analysts reiterated a “buy” rating, setting a $590 price target based on Adobe’s potential growth from AI. They acknowledged the company’s earnings reflected some AI progress but suggested it “maybe not enough to appease bears.”

Jefferies also pointed out that Adobe’s projections, while elevated, imply a slower growth rate in the fiscal fourth quarter, attributing this to management’s cautious approach amid prevailing macroeconomic uncertainties.

Bank of America increased its price target for Adobe from $424 to $475, citing the company’s outlook and AI growth prospects. They commended Adobe for “solid execution in a weaker software backdrop,” distinguishing it from other software companies that have not fully incorporated positive results into their full-year forecasts.

Citi analysts,though,expressed less optimism,voicing concerns that intensifying competition and AI-driven disruptions could impede Adobe’s progress. Citi assigned a “neutral” rating to the stock with a $465 target.

Deutsche Bank analysts, while maintaining a “hold” rating and a $475 target, stated they “expect the stock to remain range-bound until the company demonstrates more tangible success from AI.”