Financial Stocks Struggle as JPMorgan's Q4 Earnings Fail to Boost Market
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 13 2026
0mins
Should l Buy ADBE?
Source: CNBC
- Financial Sector Weakness: Financial stocks have struggled for the second consecutive day following President Trump's announcement of a 10% interest rate cap on credit cards, indicating market sensitivity to policy changes and investor confidence erosion.
- JPMorgan's Q4 Results: Although JPMorgan's fourth-quarter earnings were generally better than expected, the results turned into a 'sell-the-news' event due to overly high market expectations, reflecting a cautious investor sentiment towards financial stocks.
- Software Sector Pressure: Enterprise software stocks are under pressure from AI-driven disruption risks, with Salesforce shares falling about 7% and ServiceNow hitting a new 52-week low, highlighting increasing market concerns regarding tech stocks.
- Divergence in Cybersecurity Stocks: Despite the overall software sector decline, Palo Alto Networks saw a boost after being added to Citi's 'analyst focus list', with analysts projecting its market cap could reach $200 billion, indicating ongoing market interest in the cybersecurity space.
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Analyst Views on ADBE
Wall Street analysts forecast ADBE stock price to rise
24 Analyst Rating
17 Buy
6 Hold
1 Sell
Moderate Buy
Current: 262.500
Low
310.00
Averages
454.52
High
660.00
Current: 262.500
Low
310.00
Averages
454.52
High
660.00
About ADBE
Adobe Inc. is a global technology company. The Company's products, services and solutions are used around the world to imagine, create, manage, deliver, measure, optimize and engage with content across surfaces and fuel digital experiences. Its segments include Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment is centered around Adobe Creative Cloud and Adobe Document Cloud, which include Adobe Express, Adobe Firefly, Photoshop and other products, offering a variety of tools for creative professionals, communicators and other consumers. The Digital Experience segment provides an integrated platform and set of products, services and solutions through Adobe Experience Cloud. The Publishing and Advertising segment contains legacy products and services. In addition, its Adobe GenStudio solution allows businesses to simplify their content supply chain process with generative artificial intelligence (AI) capabilities and intelligent automation.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Unique Market Positioning: The company focuses on providing software for HVAC, roofing, plumbing, and other skilled trades, catering to specific needs and avoiding direct competition with large enterprise software, thus remaining relatively insulated from AI disruptions.
- Improved Profitability: ServiceTitan's non-GAAP operating margin increased from 0.8% to 8.6% year-over-year, indicating significant progress in cost optimization and efficiency, enhancing its future profit potential.
- AI Application Prospects: Executives mentioned integrating AI technologies into their platform during the latest earnings call, indicating that ServiceTitan not only embraces AI but plans to leverage it to enhance software performance, maintaining a competitive edge.
See More
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See More
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- Market Overreaction: The iShares Expanded Tech-Software ETF has dropped 30% since late October due to fears of AI competition, yet high switching costs may prevent businesses from easily changing software providers, suggesting future earnings could be more predictable than the market anticipates.
- Microsoft's Growth Potential: Microsoft 365 Commercial sales rose 14% year-over-year, with consumer sales up 27% and Dynamics 365 sales increasing by 17%, showcasing strong software performance under AI integration, while its forward P/E ratio stands at just 24, indicating a low valuation.
- Atlassian's Cloud Transition: Atlassian is pushing customers to its cloud-based platform, achieving a 120% net revenue retention rate for cloud customers in fiscal 2025, with momentum expected to continue into 2026; despite a forward P/E of 21, management forecasts an 18% revenue growth.
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See More
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- Market Panic and Investment Opportunity: Despite a 30% sell-off in software stocks due to fears of AI disruption, the panic in the market may present an excellent buying opportunity for patient long-term investors, especially since many software companies have high switching costs.
- Microsoft's Growth Potential: Microsoft 365 Commercial sales grew 14% year-over-year, with consumer sales soaring 27%, indicating strong growth potential in its core software business under AI integration, while its forward P/E has dropped to 24, highlighting the attractiveness of its current valuation.
- Atlassian's Cloud Transition: Atlassian is pushing customers to its cloud-based work platform, achieving a net revenue retention rate of 120%, and is expected to continue this growth into 2026, with a current P/E of 21 reflecting its future profitability and market competitiveness.
- Adobe's AI Integration: Adobe's annual recurring revenue is growing at a double-digit pace driven by AI products, and despite market fears of its software being displaced by AI, its current forward P/E is below 12, indicating the investment value of its stock.
See More
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- Rising Default Risks: UBS analysts project that corporate loan defaults could reach between $75 billion and $120 billion over the next year, particularly impacting software and data services firms owned by private equity, thereby exacerbating instability in the credit markets.
- Delayed Market Reaction: Analysts note that the market has been slow to respond to the rapid advancements in AI technology, with many investors failing to timely recalibrate their views on credit evaluations, leading to an underestimation of credit risks that could trigger broader credit tightening.
- Potential Credit Crisis: In a worst-case scenario, default rates could double the baseline estimates, resulting in a sharp decline in liquidity in the credit markets, creating what is known as a 'tail risk' that could severely impact many companies.
- Industry Classification Impact: Mish categorizes companies into three groups, indicating that creators of foundational large language models like Anthropic and OpenAI are likely to emerge as winners, while high-debt private equity-owned software firms face greater survival pressures and may be eliminated in the AI transformation.
See More
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- Rising Default Risks: UBS analyst Matthew Mish anticipates that leveraged loans and private credit markets could see $75 billion to $120 billion in new defaults by year-end, reflecting the pressure AI transformation places on companies, particularly software and data services firms owned by private equity.
- Delayed Market Reaction: Mish notes that the market has been slow to react to the rapid advancements in AI technology, leading investors to reassess credit risks, especially after software firms were hit hard, indicating that credit markets may be the next area affected.
- Credit Crunch Risks: Mish warns that if the pace of AI transition accelerates, default rates could double, potentially triggering a credit crunch in loan markets, affecting funding channels and causing broader economic repercussions.
- Industry Classification Impact: Mish categorizes companies into three groups, indicating that those creating foundational large language models like Anthropic and OpenAI may emerge as winners, while private equity-owned software firms with high debt levels face greater risks, highlighting a reshuffling of winners and losers within the industry.
See More
