By Mackenzie Tatananni

Less than a year after going public, Figma isn't faring well. The design-software maker has been battered by fears of artificial intelligence disruption and a broad sector downturn.

But as attitudes toward software shift, Citi Research analyst Tyler Radke is recommending investors pile into Figma stock, initiating coverage at Buy with a $36 price target.

Figma shares were up 4.1% at $18.72 in premarket trading Wednesday. Heading into the session, the stock has cratered 52% in 2026 against a 9.7% gain for the S&P 500.

The design software market faces unique risks, Radke conceded, as generative AI reduces the time and skill required for prototyping and ideation, in turn blurring the boundaries "of who a 'designer' is." However, lowering the barrier of entry to design tools "increases the importance of structured workflows," Radke wrote, adding, "we see Figma becoming the system of record that brings those workflows together."

Figma charges on a per-seat basis, factoring in both the total headcount and the tier of paid license required to access specific tools. While the proliferation of AI raises what Radke calls "legitimate concerns around seat compression," he believes the company has "ample offsetting growth levers" that could more than offset any declines in traditional seat expansion.

Radke noted that his revenue estimates sit above the Street, but his optimistic outlook relies on Figma's successful AI integration. Despite fears that the technology could threaten demand, early checks already show strong user engagement. "Figma has demonstrated strong ability to execute even against a tougher discretionary IT buying backdrop," Radke wrote.

As he sees it, the company is just beginning to break into a market where peers like Canva and Adobe have already established a foothold. Radke estimates a $25 billion total addressable market for 2025, meaning Figma has captured just 4% of market share. That TAM is expected to double by 2029 as Figma expands its products and use cases, and as AI helps the company draw in less skilled users who weren't previously part of its target audience.

Simply put, Figma is "built for AI-driven design chaos," Radke wrote. It's up to investors to decide whether to buy into this narrative and bet on a turnaround for the struggling software maker.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 17, 2026 08:25 ET (12:25 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.