By George Glover

Adobe stock was sliding Thursday after catching a downgrade despite solid enough earnings. It says a lot about where the market's at right now.

At least 15 analysts cut their price targets on shares, according to data from FactSet, and Deutsche Bank's Brad Zelnick lowered his rating to Hold from Buy.

That gloominess was weighing on the stock in early trading Thursday. Adobe shares slipped 4.8% ahead of the opening bell. Futures tracking the S&P 500 were roughly flat.

The creative software company posted better-than-expected profit and revenue after Wednesday's close, but stuck with its current guidance. The Street was hoping for a raise.

Adobe said it still expects full year earnings of $20.20 to $20.50 a share, on revenue of between $23.3 billion and $23.6 billion. The midpoints of those figures fall just below what analysts were estimating, per FactSet.

The company faces two big challenges: Artificial intelligence and a tough macroeconomic environment. Investors have been worrying for a while about how quickly Adobe can monetize its various AI initiatives, and now they'll have to factor in the possibility that spending by consumers and businesses could slow, with U.S. President Donald Trump's tariffs expected to fuel a flare-up in inflation and weigh on growth.

That speaks to the state of the broader market, as well. The AI trade powered huge gains for stocks in 2023 and 2024, but the rapid rise of Chinese start-up DeepSeek's cheap large-language model has investors wondering how long the boom can last. And Trump's trade war isn't helping -- the S&P 500 has tumbled 7.5% over the past month, dragged down by the expectation that his levies will drag down the U.S. economy.

So Adobe's latest earnings could be a blueprint of what's to come for the market.

Write to George Glover at george.glover@dowjones.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.

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March 13, 2025 08:19 ET (12:19 GMT)

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