Adobe's Stock Plunges 65% Amid AI Alternatives

Key Takeaways

• Adobe's stock has dropped 65% as competitors release AI-powered alternatives like open-source PhotoCraft
• Microsoft rose 37% in three months, with scale and trust outweighing less advanced AI offerings
• Janus Henderson invested in F5 to capitalize on growing enterprise AI inference demand
• 1Password surpassed $500M ARR as AI agent security demand drives 500% growth in non-human identities
• People Inc. sees AI agent traffic grow 7,851% year over year through custom APIs
• S&P gave Meta a negative outlook over risks from the AI spending boom and rising leverage
• Tom Lee believes the AI stock selloff may have hit its bottom
• Midterm elections could reshape defense, healthcare, crypto, and AI sectors through policy shifts
• Key Senate races in Ohio, Kansas, and Texas may alter financial regulation and AI investment rules
• Apple accounts for over 50% of total consumer sales among S&P 500's largest companies

AI Challenges Adobe's Dominance and Competitive Edge

Latitude Global Fund's Q3 2026 letter criticized Adobe for lacking innovation over the past decade. Although operating margins peaked at 36% in 2024, the stock has dropped 65% since. Coders used large language models to decompile Photoshop and release a free, open-source alternative called PhotoCraft. The fund noted that customers may leave Adobe as competitive pressures increase.

Microsoft's AI Value Driven by Scale and Trust

Aoris Investment Management highlighted Microsoft as a top performer in its Q3 2026 letter. The stock rose 37% over three months, adding 2.4% to the fund's return. The letter noted that investors previously focused on model capability, with Anthropic's Claude leading rankings. Despite Microsoft's AI offerings appearing less advanced, the company's scale and trust remain key advantages.

Janus Henderson Invests in F5 for AI Infrastructure Growth

Janus Henderson highlighted F5, Inc. in its Q3 2026 Global Sustainable Equity Fund letter. The fund purchased F5 because it provides cybersecurity and application delivery services. Growing enterprise AI inference workloads are driving demand for F5's traffic management and security infrastructure. The fund returned 1.86% in the quarter, matching its benchmark.

Midterm Elections May Shift Defense and Healthcare Stock Outlook

The upcoming midterm election could reshape industries closely tied to Washington, including defense, healthcare, crypto, and AI. Democratic control of Congress could lead to more investigations and changes to federal spending. Historically, the S&P 500 gained an average of 12.1% per year under Republican presidents, though analysts warn this trend may not hold. Probes and policy shifts could significantly impact companies in these sectors.

Key US Senate Races Could Alter Wall Street and AI Rules

Several competitive Senate races are being watched for their potential impact on financial regulation and AI investment. In Ohio, Sherrod Brown's return could influence crypto and banking policy after the industry spent over $50 million to defeat him. In Kansas, Roger Marshall's swipe fee legislation faces opposition from Wall Street. In Texas, Ken Paxton's legal battles with banks and asset managers add another layer of uncertainty for investors.

1Password surpasses $500M ARR driven by AI agent security demand

1Password has passed $500M in annual recurring revenue as demand grows for AI agent security tools. The company now serves over 200,000 businesses, including 85 percent of the Forbes AI 50. Monthly active human users of its developer and AI security tools grew 200 percent year over year, while non-human identities grew 500 percent. 1Password is also building integrations with personal AI agents from Meta, Anthropic, OpenAI and others.

Apple makes up over half of S&P 500 top consumer sales

Analyst Horace Dediu reported that Apple accounts for over 50 percent of total consumer sales among the S&P 500's largest companies. In 2010, eight of the 20 largest companies were consumer focused, but by 2026 no company besides Apple had a consumer sales share above 17.9. Companies like Nvidia, TSMC and Saudi Aramco were listed with zero consumer exposure.

People Inc. builds custom APIs for AI agents to access journalism

People Inc. is creating custom APIs so AI agents can access its journalism more efficiently. Instead of forcing AI systems to read full webpages, the company sends article text in Markdown with details like author and publication date. Traffic from AI agents and agentic browsers grew 7,851 percent year over year according to HUMAN's 2026 State of AI Traffic report.

MediaTek shares rise as CEO highlights strong AI chip demand

Shares of MediaTek rose 2.3 percent to T$4,005 after CEO said demand for artificial intelligence will keep growing. The stock rose as much as 4 percent during the day. The CEO noted that AI-driven demand will continue, though the pace may vary.

Ceva extends wireless IP leadership as AI moves to connected devices

Ceva held approximately 68 percent market share in wireless interface IP in 2025, about 12 times that of the next largest vendor. Its wireless connectivity IP is used in roughly 30 percent of the world's Bluetooth-enabled IoT devices and 15 percent of Wi-Fi-enabled IoT devices shipped annually. Ceva is advancing Bluetooth HDT, Wi-Fi 8 and PentaG-Edge to help build intelligent connected products.

Amazon opens delivery network to all businesses

Amazon Logistics now lets any business buy its freight, warehousing and delivery services. Merchants using its fulfilment tool can add Prime delivery on their own websites. AI shopping agents used by over 400 million customers make fast delivery easier to compare. This shift benefits from Amazon's growing network.

S&P gives Meta negative outlook over AI spending risks

S&P Global gave Meta a negative outlook due to risks from the AI spending boom. Meta's leverage rose from about 0.1x in 2025 because it leases data-center capacity. S&P questions when Meta's new revenue from AI tools will surpass its costs. Meta says its AI investments are already boosting engagement and business returns.

Tom Lee calls bottom on AI stock selloff

Fundstrat co-founder Tom Lee says the AI stock selloff may have hit its bottom. He argues the AI market is still tight, not overcapacity. Intel projected quarterly revenue of $15 billion to $16 billion, missing expectations by about $1.6 billion. Lee also points to crypto's limited reaction to the Binance breach as a positive sign.

Sources

• AI Puts Adobe’s (ADBE) Competitive Edge to the Test
• Microsoft Corp.’s (MSFT) AI Advantage: Scale, Trust, and Economic Value
• Janus Henderson Sees AI Infrastructure Opportunity in F5, Inc. (FFIV) as Enterprise Demand Grows
• Defense, healthcare, crypto and AI: How the midterm election could affect stocks
• Which US Midterm Elections Could Reshape Wall Street, Crypto and AI Investments?
• AI agent security adoption helps push 1Password past $500M ARR
• Apple Is Half the S&P 500's Top Consumer Sales, Asymco Says
• People Inc. is building custom APIs to make its journalism easier for AI agents to use
• MediaTek shares rise as CEO flags strong AI-fueled chip demand
• Ceva Extends Wireless Connectivity IP Leadership as AI Moves to Connected Devices
• Amazon opens delivery network to all just as AI shopping agents reward the quickest
• S&P’s negative outlook on Meta underscores the risks of the AI spending boom
• Tom Lee Calls Bottom on AI Stock Selloff, Citing Tight Supply and Crypto Resilience