Look who's losing the AI race

With all eyes on the state of the AI trade, it’s hard not to wince when companies scrambling to catch up stumble and fall flat.

Take Meta Platforms

The social media giant’s much-hyped foundational AI model, codenamed Avocado, was supposed to make its debut this month. But it’s been delayed until at least May after internal tests for Avocado’s coding, reasoning, and writing skills fell short of all three of its arch rivals: Google Gemini, Anthropic’s Claude, and OpenAI’s ChatGPT.

It’s a mortifying setback, especially since Meta’s last AI model, Llama 4, also underwhelmed last year. Yet Meta has pressed ahead with its AI endeavors anyway, nearly doubling capital spending from $72 billion in 2025 to $135 billion in 2026. CEO Mark Zuckerberg also appointed 29-year-old Alexander Wang as Meta’s new chief AI officer, who whipped up an elite task force called TBD Lab to work on Avocado, as well as another fruit-themed model for video and images called Mango.

The team’s lack of progress has made shareholders wonder why Zuckerberg is spending so much cash to keep up with the competition. In fact, Zuck may soon be handing money to the very companies he’s trying to beat: The New York Times reported yesterday that Meta may temporarily license Alphabet’s Gemini to power its AI products, which would simultaneously embarrass Meta while underscoring Alphabet’s lead in the AI race.

Investors aren’t exactly thrilled about these developments: shares of Meta are down around 7.03% in 2026, including a 3.83% decline today.

Meanwhile, over at Adobe

AI has thrown software companies into an existential crisis: Will it make them obsolete? The latest casualty is Adobe, which reported better-than-expected fiscal first-quarter earnings only to have the news upstaged by longtime CEO Shantanu Narayen’s announcement that he plans to step down once a more AI-savvy successor is found.

Shares have soared 540% in Narayen’s 18 years at the company—far outpacing the S&P’s 351% gains—but investors now fear that generative AI could make it easier to create visual media without Photoshop and other pricey Adobe tools. That has sent shares plummeting 28.76% this year, including 7.58% today.

In an effort to stay in the game, Adobe has integrated third-party AI into certain products like Photoshop and Premiere Pro, and launched its own AI tool, Firefly. This has helped triple Adobe’s AI-first annualized recurring revenue (ARR) year over year to $26.06 billion. Still, some say it’s too little too late, and that fresh leadership is what it’ll take to get up to speed.

Bottom line: The race for AI dominance is far from over, and things in tech can change fast. Alphabet was once the biggest loser, now it’s growing more dominant—and while Meta and Adobe are in the doghouse for now, who knows what tomorrow will bring.—JD