BNP Paribas has shared its perspective on the recent sell-off in enterprise software stocks, including Oracle (ORCL.US) and Adobe (ADBE.US). Regarding Adobe, analyst Stéphane Slowiokski acknowledges that the stock is under pressure due to concerns about AI disruption. Adobe likely understands that it needs to first stabilize and then re-accelerate growth to alleviate these concerns. However, Slowiokski indicates this scenario may not materialize quickly.

In a client note, Slowiokski wrote, "As new users can now start with a free product (currently with 70 million monthly active users and growing rapidly), the time to monetize customers may be longer than in the past." He added, "Although Adobe remains confident in the value its products deliver—evidenced by resilient user and usage growth and the expectation to at least maintain net new annual recurring revenue this year—it may take time for the business model to return to accelerated growth. Furthermore, developing Adobe's position as a model aggregation platform for the creator community will also require time."

The company plans to hold its Adobe Summit in April. Slowiokski pointed out that the messaging there will likely focus on product metrics "impacted by AI" rather than being "AI-first." He explained that new AI-driven catalysts this year could include a shift towards third-party model usage, demand for higher resolution, and growth in video consumption, which would in turn drive increased consumption of credits.

For Oracle, the issues revolve around its balance sheet. The company recently announced a capital plan for 2026, which includes raising up to $50 billion through debt and equity financing. Slowiokski explained, "While we believe the debt issuance was largely anticipated by the market, the equity component was somewhat surprising, as discussions since the October Investor Day had centered on credit." He continued, "We believe pressure in the debt markets for software companies, including Oracle, likely contributed to this equity issuance. Based on the market's initial reaction, we believe this financing arrangement has helped to somewhat calm market anxieties."

Slowiokski added that he does not anticipate vendor financing to occur and noted that Oracle continues to indicate that its required financing will not exceed the $100 billion mentioned in its last earnings report. "Overall, we believe Oracle remains confident in achieving its 2030 targets," Slowiokski further stated. "Data center construction and delivery targets are on track, and funding is secured. Although winning more contracts and building the order pipeline will be necessary over the coming years to meet 2030 revenue and profit goals, Oracle expects its existing AI customers to contribute more orders as the AI arms race continues."