Concerns about the impact artificial intelligence will have on software companies have prompted more Wall Street analysts to recommend selling Adobe Inc. and Salesforce Inc. stock than they have in years.

Morgan Stanley is the latest to caution about the risk, downgrading both the companies along with several other stocks in the sector. At least five — including Stifel, Evercore ISI, Wolfe Research, and Phillip Securities — have cut their recommendation on Adobe since the start of June, and more than a dozen firms have downgraded it in 2026.

With these cuts, Adobe’s consensus recommendation — a proxy for the ratio of buy, hold, and sell ratings — has dropped to 3.3 out of five. That’s the lowest since the 1990s, according to data compiled by Bloomberg. For Salesforce, that number is now 4.4, the lowest since 2012, after recent downgrades from both Morgan Stanley and KeyBanc Capital Markets citing its Agentforce AI product.

The moves underscore caution toward the software sector, which has come under heavy selling pressure this year on worries that competition from AI services will permanently erode the industry’s growth potential, pricing power, and margins.

“Adobe’s concurrent freemium, leadership, and reinvestment transitions compound execution risk as the GenAI disruption debate increasingly clouds the path to ARR re-acceleration,” wrote Morgan Stanley analyst Adam Wood, referring to annual recurring revenue.

While the valuation prices in “much of this disruption risk, Adobe’s simultaneous transitions reduce visibility – and therefore our conviction – in the timing and magnitude of a potential turnaround,” Wood added.

On Salesforce, Morgan Stanley’s Elizabeth Porter wrote that key performance indicators for the company’s Agentforce AI product “have yet to drive an inflection in organic growth as legacy portfolio drags persist.”

Morgan Stanley also downgraded several other companies within software, including: Workday Inc., Intuit Inc., JFrog Ltd., Elastic NV, PagerDuty Inc., Rapid7 Inc., SPS Commerce Inc., BlackLine Inc., and Vertex Inc. It upgraded Fortinet Inc. to equal-weight, seeing “a solid near-term setup” for the security software company.

The iShares Expanded Tech-Software Sector ETF, an exchange-traded fund that is a widely used proxy for the sector, fell one per cent on Tuesday, bringing its year-to-date decline to 13 per cent. Adobe slumped 3.7 per cent and was down more than 35 per cent this year. Salesforce slid 1.6 per cent and had declined about 36 per cent in 2026.

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Bloomberg.com