To The Moon

$Figma(FIG)$ released its Q4 2025 earnings results on February 18, 2026, at 4:00 PM ET, and the market’s reaction has been a loud sigh of relief. After a brutal start to the year where the stock dropped roughly 40%, these results have acted as a powerful "de-risking" event for the software sector.

The core narrative shifts from "AI will replace software" to "AI is supercharging software usage."

Figma (FIG) Q4 2025 Earnings Analysis

Figma’s performance silenced skeptics who feared that generative AI would cannibalize the design profession. Instead, the data suggests AI is driving deeper enterprise adoption.

Key Highlights:

• AI Monetization: Figma revealed that 30% of their enterprise customers ($100k+ ARR) are now using "Figma Make" (their AI design suite) on a weekly basis.

• The "Anthropic" Effect: Management highlighted a new integration with Anthropic’s Claude Code, allowing users to turn code into editable designs instantly—positioning Figma as a "bridge" rather than a victim of AI automation.

• Customer Tier Growth: The company now has 67 customers paying over $1M in annual recurring revenue (ARR), a 68% increase year-over-year.

Market Signals: What this means for AI Software Stocks

Figma’s results serve as a "litmus test" for the broader SaaS (Software-as-a-Service) industry. Here are the three primary signals being sent to the market:

1. Efficiency over Replacement: The "AI Fear" that software seats would be cut because "AI can do the work" is being replaced by evidence of productivity expansion. Figma is seeing more teams (not fewer) join the platform to manage the higher volume of assets AI can produce.

2. The "Platform" Moat: Standalone AI wrappers are losing steam, while "incumbent" platforms (like Figma, ServiceNow, and Adobe) are successfully absorbing AI features to lock in users.

3. Revenue Rebound Potential: Figma's 15% post-earnings surge suggests that the "AI Armageddon" for software was likely oversold. Investors are beginning to rotate back into "Beaten-down SaaS" as valuations hit multi-year lows.

Rebound or Deeper Drop?

The Verdict: Tech Rotation is likely.

While some niche sectors (like Human Capital Management) are still struggling with "seat compression" (where AI reduces the need for human staff), Figma’s report proves that Creative and Development software is in a rebound stage.

• Will we see a 40% drop? Unlikely in the near term. The 40% year-to-date drop prior to this report already "baked in" the worst-case scenario. With revenue growth accelerating to 40%, the valuation floor has likely been set.

• Rotation is the play: We are seeing a move out of "pure hardware" (chips) and into "applied AI" (software). Investors are looking for companies that can actually prove AI is boosting their Net Dollar Retention (NDR)—and Figma just provided the blueprint.

Note: Watch $NVIDIA(NVDA)$ ’s earnings on Feb 25. If they confirm that software companies are still buying massive amounts of compute to power these new features, the SaaS rebound could turn into a full-scale rally.

Comparing Figma and Adobe in early 2026 is a study of two different AI strategies: Figma is winning the "Productivity & Collaboration" front, while Adobe is maintaining its lead in "Creative Expression & Commercial Safety."

Following their respective earnings reports (Adobe's Q4 2025 in Dec and Figma's Q4 2025 on Feb 18, 2026), here is how the metrics stack up.

AI Adoption Metrics: Head-to-Head

Who is Winning Which Front?

Figma: The Efficiency King

Figma is winning the "AI for Work" battle. Their integration of Gemini 3 Pro and Nano Banana Pro allows designers to automate the most tedious parts of their jobs (auto-layout, content filling, and prototyping).

• The Edge: Figma's AI is utilitarian. It’s about building products faster. By adding 90,000 paid teams in late 2025, they’ve proven that AI is expanding their user base rather than shrinking it.

• Market Sentiment: Investors see Figma as an "AI Compounder"—a company where AI makes the product so much better that customers spend more money (as seen in their 136% NDR).

Adobe: The Commercial Fortress $Adobe(ADBE)$

Adobe is winning on safety and scale. While Figma focuses on product design, Adobe owns the "final mile" of creative production.

• The Edge: Copyright Indemnification. Large enterprises (Fortune 500) prefer Adobe’s Firefly because it is trained on licensed Adobe Stock, protecting them from legal lawsuits. Adobe reported a 3x increase in generative credit consumption last quarter, showing that while users might not use it daily, they use it for high-value, final-production tasks.

• The Moat: Adobe is pivoting to "Agentic AI"—AI that doesn't just generate a cat photo but manages an entire marketing campaign.

The "AI Design War" Verdict

It is no longer a winner-take-all market. The "war" has effectively split the industry into two clear territories:

1. Figma owns the "Product" (UX/UI): If you are building an app or a website, AI has made Figma the undisputed operating system. Their growth rate (38%) vs. Adobe's Digital Media growth (11%) shows where the new money is flowing.

2. Adobe owns the "Asset" (Marketing/Creative): If you are a brand like Coca-Cola or Nike, you still live in Adobe for high-fidelity assets because of legal safety and deep Photoshop/After Effects integration.

Summary: Is Figma "winning"?

Yes, in terms of momentum and valuation. Figma’s revenue growth is triple that of Adobe’s, and their AI adoption among power users (30% weekly) is significantly higher than Adobe's general user base. However, Adobe is the "value" play—trading at a steep discount (approx. 16x P/E in Feb 2026) compared to Figma’s high-growth sales multiple.

The Bottom Line: Figma is the "Aggressor" using AI to steal market share in software development, while Adobe is the "Landlord" using AI to defend its massive enterprise territory.

In the next section, in order for us to evaluate the risk-reward profile of Figma (FIG) and Adobe (ADBE) following Figma's February 18 earnings, we have to look at their valuation multiples in the context of their vastly different financial profiles: one is a hyper-growth "disruptor" reaching for profitability, while the other is a massive "cash machine" defending its moat.

Valuation Multiple Comparison (as of Feb 19, 2026)

Risk-Reward Analysis

Figma (FIG): The High-Beta Rebound Play

Figma’s valuation has undergone a massive "reset" from its IPO highs (once over 50x sales). At 11.8x P/S, it is still expensive compared to the broader software sector (avg. ~6x), but it is growing nearly 4x faster than Adobe.

• Reward: If Figma continues to beat earnings and proves that its Net Dollar Retention (136%) is sustainable through AI-led seat expansion, the stock could easily re-rate to 15x–20x sales. With the stock down 80% from its all-time high, the potential for a "relief rally" is high.

• Risk: Extreme volatility and heavy Stock-Based Compensation (SBC). Figma is still burning cash on a GAAP basis. If AI tools like Anthropic’s Claude Code eventually make designers redundant, Figma’s high multiple will collapse.

Adobe (ADBE): The "Deep Value" Defensive Play

Adobe is currently trading at a valuation usually reserved for "legacy" tech like IBM or Oracle (historically 12x–16x P/E). The market has priced in a "bear case" scenario where AI destroys Adobe's business.

• Reward: Analysts suggest Adobe is undervalued by nearly 50% relative to its free cash flow. A shift in narrative—from "AI threat" to "AI tool"—could drive the P/E back to its historical average of 25x, nearly doubling the share price without requiring any revenue acceleration.

• Risk: The "Death by a Thousand Cuts." While Figma is the main rival, thousands of small AI startups are chipping away at Adobe’s edges. If revenue growth dips into the single digits, Adobe could become a "value trap."

The Verdict: Which is the better entry?

• For the Growth Investor: Figma (FIG) offers a better "rebound stage" entry. It has a higher "velocity" of growth and the market is currently rewarding companies that show high AI adoption rates (30% weekly usage). Its post-earnings bounce of 7% suggests the bottom is likely in.

• For the Value Investor: Adobe (ADBE) is the superior choice. Buying a global monopoly at 12x forward earnings is a rare opportunity. Even if growth stays slow at 10%, the stock's massive buyback program and $10B in annual cash flow provide a significant floor.

Final Signal: Figma's report has effectively "saved" the software sector's valuation for now. If you have a 3-year horizon, a 70/30 split (Figma for growth/Adobe for stability) captures the AI software rebound while hedging against a deeper tech correction.

Based on the market data as of February 19, 2026, both stocks are currently navigating a high-volatility "reset" phase. While Figma is showing signs of a classic "V-shaped" recovery from its lows, Adobe is still searching for a definitive bottom amidst a persistent downtrend.

Figma (FIG) Technical Analysis

Figma’s Q4 earnings on Feb 18 acted as a major catalyst, helping it bounce off what appears to be a multi-month floor.

• Current Price: ~$24.77 (Post-earnings surge)

• Key Support: $21.71 – $22.00. This area was tested repeatedly in early February. The strong defense of the $22 level by institutional buyers (including Ark Invest) suggests this is the "line in the sand."

• Key Resistance: $34.34. This is the immediate ceiling. A break above this level would signal a shift from a "dead cat bounce" to a primary uptrend.

• Technical Outlook: The RSI was recently in oversold territory (~33) but is trending upward. Volume spiked to 3x the average during the earnings release, indicating high-conviction buying.

Adobe (ADBE) Technical Analysis

Adobe is currently in a more precarious position. It is technically in a "falling trend channel," and despite being fundamentally "cheap," the chart remains bearish.

• Current Price: ~$260.45

• Key Support: $251.10 – $257.00. The $251 level is the 52-week low. If it breaks below $250, there is "air" below it, and the stock could see a swift capitulation toward $230.

• Key Resistance: $263.98 (immediate) and $302.68 (major). To regain investor trust, Adobe needs to close back above the $300 psychological barrier.

• Technical Outlook: Indicators are mixed but lean bearish. The stock is below its 20-day, 50-day, and 200-day moving averages. However, a positive RSI divergence (where the price hits new lows but the RSI starts rising) is forming, which often precedes a sharp reversal.

Strategic Summary: Support vs. Resistance

The "AI Fear" Verdict

The technicals suggest that Figma has successfully "de-risked." Its chart shows it is making "higher lows" since the Feb 18 report.

Adobe, on the other hand, is the stock providing the "signal for further AI fears." Until Adobe can break its resistance at $264, the market will remain skeptical of the legacy software giants. If Adobe fails to hold $250, it could indeed drag the rest of the AI software sector down for one final "shakeout" before a broader tech rotation begins.

Summary

Figma (FIG) released its Q4 2025 earnings on February 18, 2026, delivering a performance that has significantly shifted the "AI Software" narrative from fear to recovery.

Post-Earnings Analysis

Figma reported a strong double-beat, with Revenue of $303.8M (up 40% YoY) and Adjusted EPS of $0.08, both comfortably ahead of analyst consensus. Crucially, the Net Dollar Retention (NDR) rose to 136%, proving that existing enterprise customers are not just staying, but expanding their spend despite the rise of generative AI tools.

Market Signals from the Report:

• The "Usage Gap" is Closing: Figma reported that weekly active users of Figma Make (its AI suite) grew 70% quarter-over-quarter. This signals that AI is being treated as a productivity multiplier rather than a replacement for software seats.

• Enterprise Resilience: With 67 customers now paying over $1M ARR, the signal to the market is that large-scale digital transformation still requires "human-in-the-loop" collaborative platforms.

• Guidance Leap: Figma’s 2026 revenue guidance of $1.37B (approx. 30% growth) blew past the $1.28B estimate, suggesting the "SaaSpocalypse" was an overreaction.

Rebound vs. Deeper Drop?

The "40% Drop" Fear: Before this report, FIG had plummeted nearly 40% year-to-date in 2026 due to fears that AI agents (like Anthropic’s Claude Code) would automate design. These earnings effectively acted as a "circuit breaker" for that fear.

The Rotation Play: We are now seeing a Tech Rotation. Investors are moving capital out of overextended AI hardware (chips) and into "Applied AI" software. Figma’s 15% post-market surge suggests the sector has likely bottomed.

Verdict: Figma’s results are a green light for a rebound. Rather than signaling a deeper drop, they provide evidence that high-quality software companies can successfully monetize AI. If this trend holds, we are entering a "Stage 2" AI rally where the winners are defined by software adoption, not just GPU sales.

Appreciate if you could share your thoughts in the comment section whether you think tech rotation out of overextended AI hardware (chips) and into "Applied AI" software, would mean focus on high quality Applied AI software stocks.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.