Wall Street Shifts Focus

 WallStreetBuzz
 
  WallStreetBuzz
 
Follow  Message
 
 
 
Your pulse on Wall Street! WallStreetBuzz delivers real-time market intelligence, breaking news, and expert analysis. From opening bell to closing bell, we cover major movers, market trends, sector rotation, institutional flows, and the stories moving stocks. Stay ahead of the curve with our comprehensive market coverage.
 

•  05 Jan 2026
 

Wall Street is adjusting its priorities. After a long stretch where the artificial intelligence story revolved mainly around chipmakers like NVDA, investors are now taking a closer look at software companies and asking a more disciplined question: which business models can turn AI into stable, visible growth. The recent split between IBM and Adobe reflects this change in thinking.

$IBM is gaining renewed confidence from the market as analysts and investors focus on its role in core infrastructure rather than end-user applications. Jefferies recently upgraded the stock from Hold to Buy and raised its price target from $300 to $360, citing expectations for accelerating software growth through 2026. IBM strategy centers on enterprise cloud and artificial intelligence infrastructure, areas where long-term contracts and deep client relationships matter more than short-term trends. Platforms like Watsonx allow large organizations to deploy and manage AI models within existing systems, while Red Hat OpenShift AI strengthens IBM position in hybrid cloud environments. For investors worried about volatility in the AI race, IBM offers something increasingly valuable: exposure to broad AI adoption without relying on a single application or user behavior trend.

$ADBE, by contrast, is facing growing skepticism despite its strong brand and history of innovation. Jefferies downgraded the stock from Buy to Hold and cut its price target from $500 to $400, reflecting uncertainty around near-term growth. Adobe has embedded AI into its products for years through tools like Adobe Sensei, enhancing workflows in Photoshop and Illustrator. However, the market is struggling to see a clear and immediate revenue impact. In 2025, Adobe generated about $23.8 billion in revenue, but only a small share was directly linked to AI-driven offerings. Investors are also concerned that advances in AI, including automated content creation and natural-language-driven coding, could reduce the need for traditional software licenses over time, putting pressure on Adobe subscription model.

This divergence highlights a broader Wall Street preference for infrastructure over applications in the current phase of the AI cycle. The belief is that even if software usage patterns change, demand for cloud platforms, servers, and enterprise systems will remain strong and may even grow. Application-layer companies may regain momentum later, possibly as early as 2026, once clearer monetization paths for AI emerge. For now, the market is rewarding perceived stability over promise. Traders watching this shift may find it useful to explore the full stock analysis to better understand how these themes could shape future price action.

View All Headlines