Better Creative Tools Stock: Figma vs. Adobe
Key Points
Figma's revenue is growing nearly four times faster than Adobe's, but the company is still unprofitable.
Adobe generates $10 billion in annual free cash flow and trades at a P/E under 18.
Growth investors may prefer Figma's upside, while value investors should lean toward Adobe's cash machine.
- 10 stocks we like better than Figma ›
Just a few years ago, creative software giant Adobe (NASDAQ: ADBE) tried to buy smaller rival Figma (NYSE: FIG). The $20 billion deal fell apart due to antitrust concerns; Adobe sent a $1 billion check to cover the breakup fee; and the two companies carried on as separate businesses.
That drama played out two years ago. Since then, Figma has gone public, giving investors an opportunity to bet on the younger competitor. But is it a better investment than sector king Adobe?
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Let's take a look.
What Adobe and Figma actually do
Figma was never a direct clone of Adobe. The two companies have different long-term goals and product portfolios.
Adobe is the legacy creative software giant behind household names like Photoshop, Illustrator, and Premiere. You can get specific services, but Adobe mainly sells bundled Creative Cloud subscriptions with themes such as graphic design, video editing, photo tools, and PDF management. Revenue is diversified across creative pros, enterprises, and its Document Cloud/Acrobat business.
Image source: Getty Images.
Figma competes mainly with the vector-based graphic design tool Adobe XD, which is a small piece of Adobe's broad empire. Figma's browser-based design and prototyping tool is built for real-time collaboration. It's like Alphabet's Google Docs but for user interface designers. A free tier and multiplayer-first approach made it viral with design teams, especially at start-ups and tech companies with collaborative design workflows.
On one hand, you can invest in a software giant with decades of operating history and product names you'll find in the dictionary. On the other, you can bet on a hungry upstart with a tighter focus.
Figma's growth versus Adobe's profits
Here's how Figma and Adobe's business plans translate into financial figures.
|
Metric |
Adobe |
Figma |
|---|---|---|
|
Revenue (TTM) |
$23.8 billion |
$1.0 billion |
|
Revenue Growth (Year Over Year, Latest Quarter) |
11% |
38% |
|
Net Income (Loss) (TTM) |
$7.1 billion |
($0.9 billion) |
|
Free Cash Flow (TTM) |
$9.9 billion |
$0.3 billion |
|
Price-to-Earnings Ratio (TTM) |
17.6 |
N/A |
|
Price-to-Sales Ratio (TTM) |
5.1 |
13.6 |
Figures collected from Finviz.com on 1/30/2026. TTM = trailing twelve months.
Yep, that checks out. Adobe is a massive cash machine. Figma is a fast-moving minnow by comparison. The larger stock trades at modest multiples, while Figma's shares carry a premium valuation based on revenue growth.
Ironically, Adobe's failed acquisition helped finance the competitor it couldn't buy. An extra billion dollars makes a big difference to Figma's unprofitable operations. And you know the Adobe XD website-planning product I mentioned above, which became the flashpoint of its Figma rivalry? Well, Figma won that duel. Adobe quietly shelved XD as a stand-alone product in 2023.
Picking a winner (or two)
There's no obvious loser here. Each stock just serves a different type of investor.
- Figma is the high-risk, high-reward bet. Revenue is growing nearly four times faster than Adobe's, but the company is still burning cash, and the stock has cratered from the first-day highs, exactly six months ago. You'll need conviction and a strong stomach.
- Adobe is the opposite: a profitable, cash-rich incumbent trading at modest multiples for a software company. For value investors, that's the obvious choice.
Wall Street leans slightly toward Adobe with higher analyst ratings and lower short interest, but the gap isn't dramatic. Growth investors might find Figma's upside worth the turbulence. Investors who sleep better owning profitable market leaders should stick with Adobe.
Where do I stand on that spectrum? I'm a risk-taker at heart, so Figma's more thrilling blend of lofty valuation and tremendous growth prospects is right up my alley. Even so, Adobe looks deeply undervalued right now. If I had $1,000 to invest in creative software specialists, I'd pick up one Adobe share at roughly $300 and devote the remaining $700 to Figma.
Should you buy stock in Figma right now?
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Anders Bylund has positions in Alphabet. The Motley Fool has positions in and recommends Adobe, Alphabet, and Figma. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.
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