By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
Panelists are divided on Figma's future, with some seeing potential in its 'system of record' pivot to AI-driven product management, while others caution about design tool commoditization and execution risks.
Risk: AI commoditizing design labor and enabling competitors to close the gap
Opportunity: Successfully integrating AI-driven prototyping to lock in the entire developer workflow
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
AI technology has brought winners and losers in the software sector; however, the controversy surrounding Figma (FIG) remains quite heated. After the stock fell by about 85% from its 52-week high, fears were raised that generative AI would commoditize digital design and damage the competitive edge of the company. Nevertheless, the sentiment turned positive this week as Bank of America resumed coverage of FIG stock with a "Buy" rating and a $30 price target, saying that AI could accelerate Figma's long-run growth rather than disrupt it.
The optimistic view comes in light of the ongoing search for software companies that will be able to capitalize on AI technology instead of defending from it. While the question of valuation has become one of the most important when it comes to recently listed software names, better enterprise adoption and monetization trends have become the main metrics for the street.
Figma is a maker of cloud-native collaborative design software for designers, developers, and product teams to develop digital applications and user experiences. The company is headquartered in San Francisco, California, and it operates a SaaS model based on collaborative workflows. Currently, Figma's market capitalization is approximately $9.9 billion, which makes it one of the most followed recently public software names.
FIG stock has shown extreme volatility since its public debut. The shares trade now at about $21.50, which means that they are down approximately 85% from their 52-week high of $142.92, but up more than 30% from their 52-week low of $16.60. Figma's shares rose almost 11% in the last five trading days on a positive reaction to BofA's bullish coverage initiation.
Despite the massive decline in the stock, it still trades at about 8.9 times revenues and 6.4 times book value. The company is unprofitable on a trailing basis, which means that the comparison via P/E ratio becomes meaningless. Therefore, investors are valuing the business mainly based on revenue growth potential, customer growth, and the operating leverage that could become available once Figma turns profitable.
Figma Beats on Earnings
Investor sentiment was also lifted by Figma's recent earnings report. In the first quarter, the company beat consensus on both revenues and earnings and showed 28% revenue growth year-over-year (YoY). Net revenue came in at $159.9 million, driven by improved customer acquisition, higher average order values, and better repeat purchasing.
The bottom line also got significantly better. The gross margin rose slightly to 67.7%, while the operating expenses decreased as a percentage of revenues despite bigger investments in marketing. Net income was reported at $6.3 million, or $0.03 per diluted share, compared to a small loss in the same quarter of the previous year. Adjusted EBITDA rose to $13.9 million, yielding an 8.7% adjusted EBITDA margin.
Management also raised guidance for FY26 following the better-than-expected quarterly report. The company managed to pass the mark of three million active customers for the first time, which corresponds to 12.2% annual growth, while the revenue per active customer was up 5.8% to $220. The average order value was up 4.2%, reflecting both improvements in pricing and the better product mix.
Moreover, BofA expects that AI technology could become a monetization opportunity for Figma rather than a threat. According to the bank's research, 75% of enterprise customers bought extra AI credits as they ran out of their free allowances in Q1. The number of enterprise customers generating over $100,000 in annual recurring revenue was up 48% YoY, while the net dollar retention remained exceptional at 139%.
What Do Analysts Expect for FIG Stock?
Bank of America's "Buy" rating supports the growing belief that the AI strategy of Figma could be very helpful for the competitive positioning of the company. According to the bank, AI-generated content enhances the need for collaborative workflows, and here Figma has a great advantage due to its shared design platform and enterprise ecosystem.
Analysts assign a "Moderate Buy" rating consensus and a mean price target of $31.10 for FIG stock. Given that the current share price stands at $21.54, the mean price target gives the potential upside of about 44%. The highest target stands at $42, while the lowest target is at $22.
On the date of publication, Yiannis Zourmpanos did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Four leading AI models discuss this article
"Figma's current valuation assumes AI will increase design complexity, but if AI-driven abstraction reduces the need for manual design, the company's core value proposition faces long-term structural risk."
Figma's pivot to AI-driven monetization is impressive, but the market is ignoring the 'Adobe-sized' elephant in the room. While 139% net dollar retention and 48% growth in $100k+ ARR customers signal strong enterprise stickiness, the 8.9x revenue multiple is aggressive for a company whose primary moat—collaborative design—is being commoditized by open-source LLMs and Adobe's Firefly integration. BofA’s thesis assumes AI increases workflow complexity, justifying Figma’s platform, but if AI simplifies design to a natural language prompt, the need for a collaborative design tool may shrink, not grow. I am neutral; the growth is real, but the valuation assumes a future where Figma remains the primary design interface, which is far from guaranteed.
If Figma successfully captures the 'AI-agent' workflow for product development, they move from being a design tool to a critical software development layer, which would make an 8.9x revenue multiple look cheap in retrospect.
"N/A"
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"Figma's AI monetization is real (75% enterprise uptake), but the 8.9x revenue multiple prices in sustained pricing power that AI adoption may erode within 18–24 months."
BofA's initiation looks tactically well-timed but structurally fragile. Yes, 28% YoY growth, 139% NDR, and 48% YoY growth in $100k+ customers are legitimately strong. Yes, 75% of enterprises buying AI credits suggests monetization, not cannibalization. But FIG trades at 8.9x revenue while unprofitable—that's not cheap for a design tool in a commoditizing market. The real risk: AI doesn't just enhance Figma's workflows, it enables competitors (Adobe, Canva, open-source tools) to rapidly close the gap. The $30 BofA target implies 39% upside from $21.50, but that assumes Figma maintains pricing power and enterprise stickiness as AI commoditizes design labor itself. Guidance raise is real, but one quarter doesn't prove the thesis.
If AI truly accelerates design workflows, it also accelerates the timeline for open-source and freemium competitors to replicate Figma's core value prop—and Figma's 67.7% gross margin becomes vulnerable to price competition faster than the market assumes.
"AI-driven monetization and enterprise expansion must deliver durable profitability to justify the current valuation."
BOA’s upgrade on FIG centers on AI accelerating Figma’s growth rather than eroding it, leveraging 3M active customers, 12.2% YoY growth, ARPU up 5.8%, and 139% net retention. A rising cohort of enterprise customers buying AI credits suggests scalable monetization and stickiness. But the bullish case may rely too heavily on AI as a margin engine; FIG is still unprofitable and trades near 9x revenue, implying big future growth is priced in. The risks: AI adoption could plateau, pricing power could erode in a competitive market (Adobe, Microsoft, and open-source tools), and heavy marketing costs could slow margin expansion even if ARR grows.
AI monetization may prove illusory—customers could exhaust AI credits and push back on price, especially as competition tightens. Without strong, durable ARR expansion, the upside may be limited even if AI adoption remains high.
"Figma's valuation is justified if they transition from a design tool to an essential system of record for product development."
Claude and Gemini are fixated on the design-tool commoditization risk, but you are all missing the 'system of record' pivot. Figma isn't competing with Adobe on pixels anymore; they are competing with Jira and Notion for the product development lifecycle. If they successfully integrate AI-driven prototyping, they lock in the entire developer workflow. The 8.9x multiple isn't paying for a design tool; it's paying for the inevitable transition to an AI-native product management platform.
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"The system-of-record thesis is strategically sound but requires proof points Figma hasn't yet delivered; valuation doesn't yet justify that bet."
Gemini's 'system of record' pivot is compelling but unproven. Figma's roadmap doesn't yet show deep Jira/Notion integration—they're still a design tool monetizing AI features, not a PLM platform. The 8.9x multiple assumes this transition succeeds, but execution risk is massive. Claude's margin vulnerability point stands: if Figma pivots upmarket to compete with enterprise software, gross margins compress faster than SaaS multiples typically recover. Show me the enterprise PLM traction first.
"The 'system of record' pivot is unproven; without clear PLM traction and margin durability, an 8.9x multiple is a high-risk bet on execution, not a guaranteed AI-driven re-rating."
Gemini's 'system of record' pivot is intriguing but unproven; jumping from a design tool to a PLM-like workflow requires deep Jira/Notion-level integrations, data portability, and enterprise-wide adoption across engineering, product, and ops. Without measurable PLM traction or durable gross margins, the 8.9x revenue multiple feels like a bet on an execution risk that may never materialize, not a guaranteed re-rating from an AI upgrade alone.
Panelists are divided on Figma's future, with some seeing potential in its 'system of record' pivot to AI-driven product management, while others caution about design tool commoditization and execution risks.
Successfully integrating AI-driven prototyping to lock in the entire developer workflow
AI commoditizing design labor and enabling competitors to close the gap