Figma (FIG) Stock Surges as Wall Street Says AI Fears Were Overblown

TLDR

• Figma stock surged over 8% after Citigroup launched coverage with a Buy rating and a $36 price target
• HSBC upgraded Adobe (ADBE) from Hold to Buy with a $308 price target, easing AI disruption fears across design software
• HSBC analyst noted no “material impact” from AI-powered competitors on Adobe’s business so far
• Figma posted ~$1.06B in annual revenue and holds $1.64B in cash, but remains loss-making with a net loss of ~$142M last quarter
• FIG stock had been under pressure since its 2025 IPO on fears AI tools would disrupt the design software market

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Figma (FIG) got a double boost this week. Citigroup launched coverage with a Buy rating and a $36 price target, and HSBC upgraded rival Adobe (ADBE) — both moves sending a clear message that Wall Street is cooling on AI disruption fears in the design software space.

Figma, Inc., FIG

FIG jumped 5.2% on the Citigroup call and was up over 8% at one point, pushing the stock to around $19.67 after bouncing off a recent low of $16.81. That’s a sharp recovery for a stock that had been sliding since its 2025 IPO.

Citigroup’s $36 target is nearly double where FIG is trading right now. That kind of gap draws attention from both institutional and retail traders looking for re-rating opportunities.

Adobe Upgrade Removes an Overhang

The HSBC upgrade of Adobe was arguably just as important for Figma. Analyst Stephen Bersey lifted Adobe from Hold to Buy with a $308 price target, up from $282, after Adobe reported Q2 fiscal 2026 revenue growth of 12.7% year over year.

Bersey was direct: “We have yet to see any material impact from AI-powered competitors.” He added that the market is “overestimating the adverse impact of AI-based design tools.”

That’s a meaningful statement for FIG investors. Figma’s stock had been dragged down by the same AI disruption narrative that spooked Adobe holders. If Adobe — the bigger, more established player — is holding up fine, the fear around Figma starts to look less grounded.

Adobe’s AI-first revenue did grow 3x year over year, but it still only made up about 2% of Q2 fiscal 2026 revenue. The platform’s “stickiness,” driven by workflow familiarity and embedded AI features, is keeping users in place.

Figma’s Financials: Growth First, Profits Later

Figma’s own numbers tell a classic high-growth software story. Annual revenue came in around $1.06B, with a gross margin near 80% — a strong indicator the core product scales well.

The losses are real though. Operating income last quarter was about -$137.4M, and the net loss was roughly -$142.4M. Return on assets and equity are both negative.

What keeps the bull case alive is the balance sheet. FIG holds about $1.64B in cash and short-term investments with a current ratio near 2.5 and very little debt. The company also generated nearly $97M in operating cash flow last quarter, with free cash flow around $88.6M.

FIG’s price-to-sales multiple sits around 8x — elevated, but not unusual for a software name growing at this pace with these margins.

Intraday price action after the Citigroup call was orderly. FIG traded tightly between $19.60 and $20.05 through the midday session, with dips near $19.70 getting bought. The stock is holding above prior support in the $18–$18.50 range.

Citigroup’s $36 price target and the HSBC Adobe upgrade together mark the most bullish week FIG has seen since its IPO.