Shares of Figma reached a new 52-week low this week, closing at $18.12 on Friday, marking a 20% decline from its 20-day moving average and a 40% drop from its 100-day average. The decline has prompted investors to reevaluate the design software company’s competitive landscape, particularly in light of Google‘s expanding suite of AI tools.
Financial commentator Jim Cramer spotlighted the competitive threat from Google during his January 27 broadcast of Mad Money, cautioning that the rise of such a tech giant creates considerable challenges for specialized software firms. His remarks coincided with BTIG initiating coverage on both Figma and Adobe with cautious ratings.
The competitive threat from Google became more pronounced in March when its experimental Stitch design tool introduced “vibe designing” capabilities. This feature allows users to generate high-fidelity user interfaces directly from natural language prompts, resulting in an approximately 8% drop in Figma’s shares on the announcement day, as reported by Business Insider.
The Stitch tool now includes voice capabilities and templates for various SaaS dashboards and app themes, positioning it as a formidable alternative to traditional design workflows.
In its coverage, BTIG analyst Nick Altmann assigned Figma a Hold rating, noting the company’s strong product momentum but expressing concerns regarding three specific areas. Despite the strong early traction of Figma’s new Make feature—boasting a 70% quarter-over-quarter growth in weekly active users since its broader rollout in March—questions remain about the monetization of AI capabilities.
Increasing costs associated with AI are compressing margins, while competitive pressures from major platforms like Google continue to grow. BTIG analysts have indicated that they require clearer evidence of sustained user engagement with Figma’s Make feature before becoming more optimistic about the company’s future prospects.
The firm also highlighted valuation uncertainty, stressing the necessity for greater insight into how AI will affect both growth and profitability across the design software sector.
Adobe faces similar scrutiny despite reporting approximately $24 billion in revenue for fiscal year 2025, reflecting an 11% year-over-year growth with margins of around 37%. BTIG rated Adobe as Neutral, acknowledging its status as the dominant player in creative software through its Creative Cloud suite. The firm characterized Adobe’s AI strategy as credible but maintained a cautious perspective similar to that applied to Figma.
Figma primarily generates revenue through subscription sales to its design platform, linking performance closely to seat growth, customer retention, and account expansion. The next significant catalyst for the company will be its earnings report on May 26, where analysts anticipate revenue of $316 million and a loss of three cents per share.
Despite these challenges, analyst consensus maintains a Buy Rating for Figma with an average price target of $33.40. However, caution is growing, as evidenced by RBC Capital lowering its target to $31 while keeping a Sector Perform rating on February 19, followed by Stifel cutting its target to $30 with a Hold rating on the same day.
The moving average convergence divergence indicator currently shows bearish momentum at -1.8365, below the -1.6794 signal line, indicating that sellers are maintaining control. Key resistance is identified at $22.50, where recent rebounds have faltered, while support is situated at $18, near current trading levels.
“Volatility is probably good at strengthening companies long-term.”
Figma CEO Dylan Field discussed market volatility in a February interview with CNBC, while Nvidia CEO Jensen Huang countered concerns about AI overshadowing traditional software tools during a Cisco event earlier this year.
Google defines vibe designing as a method that begins with business objectives rather than wireframes, allowing users to rapidly explore multiple ideas for superior outcomes. The Stitch agent offers real-time design critiques and can interact with users to create landing pages, making updates based on voice commands.
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