AI Is Increasing Uncertainty of Long-Term Moats Around Software, Including for Adobe

Adobe has come to dominate content creation software with its iconic Photoshop and Illustrator solutions, both now part of the broader Creative Cloud. Over the years, the firm has added new products and features to the suite through organic development and bolt-on acquisitions to drive the most comprehensive portfolio of tools used in print, digital, and video content creation. The 2021 launch of Adobe Express broadens the company’s funnel, as it incorporates popular features of the full Creative Cloud but comes in lower-cost and free versions. The 2023 introduction of Firefly marks an important artificial intelligence solution that should also attract new users and help extend the competitive position of the platform. We think Adobe is properly focusing on bringing new users under its umbrella and believe that converting these users will become more important over time.