Figma stock drops after Google’s ‘Vibe Design’ tool is updated

AI For Business


Vibe coding took the AI ​​community by storm in 2025. Now, Google is starting a new trend: “Vibe Design.”

Google Labs introduced the term Wednesday as it announced several new updates to Stitch, an AI-powered tool that uses simple prompts to generate “high-fidelity” UI designs and front-end code.

This is the latest blow to software makers as AI companies continue to roll out features that directly challenge their products.

Shares of Figma, which makes tools to design interfaces and user experiences for websites and apps, fell about 8% on Wednesday following Google’s announcement. The stock was down 5% in New York as of 12:33 p.m. Thursday.

Adobe stock also fell on Wednesday, closing the day down about $2.


Google's Stitch Design Tool.

Google’s Stitch Design Tool.

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“When you ‘design the mood’ with Stitch, you can explore many ideas quickly, leading to higher-quality results,” the company says. “Instead of starting with wireframes, you can start by describing the business goals you want to achieve, what you want your users to feel, and even examples of what currently inspires you.”

In addition to text, image, and code prompts, Stitch now also has audio capabilities. This means users can speak directly to the tool using their voice.

“Agents can critique designs in real-time, conduct interviews to design new landing pages, and make real-time updates like ‘Tell me three different menu options’ or ‘Show me this screen in a different color palette’ as they speak,” Google said in an announcement.


Design templates for Google's Stitch AI tool

Some of the templates provided by Google’s Stitch AI tool.

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The tool also includes templates such as a “SaaS Dashboard” and a variety of apps themed around health, entertainment, utilities, and more.

Advances in AI have transformed many industries, including software development. Concerns that the technology could replace traditional software tools have scared traders and left some engineers worried they could soon lose their jobs.

But AI industry leaders like Nvidia CEO Jensen Huang are pushing back against the concept of “SaaSpocalypse.”

“You can see that there are a lot of software companies whose stock prices are under a lot of pressure because they’re going to be replaced by AI in some way,” Huang said at Cisco’s AI event. “It’s the most illogical thing in the world and time will tell.”

Sam Altman, CEO of OpenAI, said the software industry is not dead, but change is coming.

“How you create it, how you use it, how much content you create each time you need it, and how much you want a consistent UX, yeah, that all changes,” Altman told TBPN.

Figma CEO Dylan Field said in an interview with CNBC in February that volatility can be good for companies.

“I think the volatility is probably good for strengthening companies over the long term,” he said.