Two major technology companies moved in opposite directions this week as investors weighed artificial intelligence growth against weakness in legacy business lines. Adobe shares rose 0.96% to $248.50 on Wednesday despite a downgrade from Citi, while Arm Holdings fell roughly 12% on Thursday after smartphone-related royalty revenue missed expectations.
Citi analyst Tyler Radke cut Adobe to Sell from Hold and lowered the price target to $207 from $250. He cited downside risks to consensus growth estimates entering fiscal 2027, leadership vacancies including the CFO and head of Digital Media, and a shift toward monthly active user growth that could pressure annual recurring revenue. Citi trimmed net new annual recurring revenue estimates by $470 million for fiscal 2027 and $500 million for fiscal 2028. The move followed October downgrades from HSBC and Wells Fargo. Adobe is scheduled to report fiscal fourth-quarter results on December 9, with analysts expecting adjusted EPS of $6.33 on revenue of $6.83 billion.
Arm, meanwhile, reported a 27% year-over-year revenue increase to $1.44 billion and adjusted EPS of 52 cents, both ahead of consensus. However, royalty revenue rose just 8% to $670 million, missing the $705 million estimate, as higher memory prices pressured the smartphone market. Licensing revenue jumped 50% to $773 million, and the company said its confidence had increased in generating up to $2 billion in AGI CPU revenue through fiscal 2027 and 2028. JPMorgan maintained an Overweight rating but reduced its price target to $245 from $255; Susquehanna kept a Positive rating with a $320 target, and Morgan Stanley stayed Equal-Weight at $212.
For crypto markets, the direct impact is limited. However, the divergence highlights how AI-driven data centre demand is outweighing older hardware and software cycles, a trend that can influence broader risk appetite across technology and digital asset markets.
