Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com -- UBS cut ratings on both Box and Dropbox, saying demand for their AI-driven offerings is not yet strong enough to offset slowing growth in cloud storage.
The brokerage downgraded Box to Neutral from Buy and trimmed its price target to $36 from $42.
UBS analysts said Box’s storage business remains stable but growth is capped until adoption of its new Enterprise Advanced plan, which includes AI tools, picks up.
“Customers tell us they are interested in Box’s AI capabilities, but adoption is being tempered in the near-term,” UBS analysts said.
Though there are expectations of growth to accelerate in 2027, near-term revenue and free cash flow are tracking roughly in line with consensus.
Dropbox fared worse, with UBS cutting its rating to Sell from Neutral and cutting its target to $27 from $29.
There are negative signals around Dropbox Dash, its new AI product, and flat spending on its file storage business.
“While two out of the three customers we spoke to are piloting Dash, none are currently planning to purchase it,” UBS said.
Brokerage expects revenue declines through 2027 and modeled free cash flow below consensus, arguing that market expectations for long-term growth are overly optimistic.
Both companies face the risk that customers will either build AI capabilities in-house or buy them bundled from larger rivals, leaving limited budgets for standalone products.
UBS said Box could return to double-digit growth if its AI platform gains traction, while Dropbox’s best-case path is modestly positive growth by 2027.
But until adoption accelerates, UBS views both stocks as fully valued or at risk of further derating.