Figma Inc. (NYSE:FIG) moved higher on Wednesday after Citi initiated coverage of the design software company with a Buy rating and a $36 price target.
Shares gained around 5% as investors responded to the positive assessment and the firm’s outlook for continued growth in the rapidly evolving artificial intelligence-driven software market.
Citi Sees AI as a Growth Opportunity Rather Than a Threat
Citi analyst Tyler Radke argued that concerns about artificial intelligence disrupting the design software industry may be overstated, suggesting that Figma is well positioned to benefit from the technology through increased usage and monetization opportunities.
According to the analyst, the company’s expanding AI capabilities could help drive higher customer engagement and broader adoption across enterprise users.
“Our proprietary customer and go-to-market (GTM) checks with hyperscalers and large financial services (FS) firms suggest strong seat upgrades & credit pack utilization, which offer positive reads on AI-monetization strategy,” Radke commented.
Customer Trends Support Positive Outlook
Citi’s research highlighted encouraging feedback from enterprise customers, including large technology companies and financial institutions.
The firm said its channel checks indicate healthy demand for additional user seats and increasing utilization of credit-based offerings, trends that may support future revenue growth.
These indicators were viewed as evidence that customers are actively adopting Figma’s AI-enabled tools and workflows.
Product Innovation Could Provide Additional Catalysts
Beyond current demand trends, Citi identified several potential drivers that could support further upside for the company.
Among them are future product releases and opportunities to monetize Model Context Protocol server functionality, which the analyst believes could create new revenue streams over time.
The brokerage sees continued innovation as an important component of Figma’s long-term growth strategy.
Lock-Up Expiration Remains a Near-Term Watch Point
While maintaining a constructive outlook, Citi noted that investors will be monitoring the company’s upcoming share lock-up expiration scheduled for mid-August.
Such events can occasionally increase stock volatility as previously restricted shareholders become eligible to sell shares.
Despite that potential overhang, the firm believes Figma remains well positioned to benefit from growing demand for AI-powered design and collaboration software.
AI Adoption Continues to Drive Sector Interest
The initiation reflects broader expectations that artificial intelligence will play an increasingly important role across the design software landscape.
Citi believes Figma is among the companies best placed to capitalize on this trend, with AI-driven functionality expected to support both customer growth and deeper platform engagement in the years ahead.