The Perfect Storm Hitting Intuit: Investigations, AI Upstarts, and a 61% Stock Rout

Intuit posts double-digit revenue growth but faces investor lawsuits over pricing, AI-powered competitors, and a 60% stock decline, raising questions about long-term growth.

Intuit finds itself in an unusually precarious position for a company that just posted double-digit revenue growth. The TurboTax parent is fighting on multiple fronts — facing legal probes over its pricing strategy, fending off a wave of AI-powered tax-prep rivals, and watching its stock shed more than 60% of its value over the past year. Shares limped into the end of last week at roughly 260 euros, barely 1.5% above the 52-week low of 256.00 euros set in late May, after a brutal stretch that has erased over half the company's market value since January alone.

The immediate trigger for the latest selling was a wave of investor lawsuits. Three law firms — BFA Law, Bleichmar Fonti, and Pomerantz — have launched investigations into whether Intuit made misleading statements about TurboTax's pricing during the 2026 tax season. The probes were sparked by the company's third-quarter earnings report in May, when management acknowledged that price-sensitive filers were hesitating. TurboTax Online paid units notched just 2% growth, and the stock suffered a double-digit one-day collapse on the subsequent trading day.

Yet the legal headaches are only part of a broader crisis of confidence. Goldman Sachs piled on on June 2, downgrading Intuit from Neutral to Sell and slashing its price target from $519 to $276. The bank's reasoning cut to the heart of the matter: rising competitive risks in the tax business, which generates roughly a quarter of Intuit's revenue and operating profit. AI-enabled newcomers such as Prime Meridian, Perplexity Tax, and Chime Tax are targeting the very market where Intuit has long been dominant — digital tax filing for individuals.

TurboTax's latest operating metrics illustrate the squeeze. In the third fiscal quarter, the consumer segment generated $5.3 billion in revenue, up 8% year over year, with TurboTax alone contributing $4.4 billion. But the mix of underlying indicators is worrying: while average revenue per paying user climbed about 11%, the total number of TurboTax Online users fell roughly 2%, and the product's share of electronic filings slipped about a percentage point. The fear on Wall Street is that even if Intuit can temporarily raise prices, a shrinking user base will undermine its long-term growth story — especially if cheaper AI alternatives gain traction.

None of this is to say Intuit's financial performance has been weak. Quite the opposite. Third-quarter revenue rose 10% to $8.56 billion, GAAP operating income advanced 8% to $4.02 billion, and diluted GAAP earnings per share reached $11.09, up 11%. Management even raised its full-year guidance for both revenue and non-GAAP profit. The disconnect between solid operational results and an accelerating stock decline is what makes the current situation so unusual — and so fraught for investors trying to gauge fair value.

Chief financial officer Sandeep Aujla is expected to address some of this uncertainty when he speaks at the Nasdaq investor conference in London this June. The market will be listening for details on the company's aggressive cost-cutting plan: Intuit is eliminating 17% of its global workforce at a restructuring cost of $300 million to $340 million. At the same time, management is doubling down on artificial intelligence, rolling out products such as Mailchimp Analytics AI and new AI features embedded in QuickBooks and TurboTax. Whether those tools can compensate for weakness in the core tax business remains an open question.

Financially, Intuit retains ample firepower. As of April 30, the company held $6.8 billion in cash and investments against $6.2 billion in debt. It repurchased $1.6 billion of its own shares during the third quarter and the board authorized a fresh $8 billion buyback program. The quarterly dividend of $1.20 a share, payable July 17, 2026, continues uninterrupted. Yet these capital returns have done little to stem the selling. A 30-day annualized volatility reading of 81% underscores just how dramatically the market is reassessing the stock — no longer as a steady financial software staple but as a potential casualty of AI-driven disruption.

Technically, the picture is equally bleak. The stock closed last week 19.8% below its 50-day moving average of 325.84 euros and a staggering 43.6% beneath its 200-day average of 463.58 euros. From the all-time high of 706.80 euros reached on July 30, 2025, Intuit has lost 63%.

The next major test comes with the fourth-quarter earnings report, due in August 2026. For the period ending July 31, management projects revenue growth of roughly 11% to 12%, with GAAP diluted EPS of $0.73 to $0.79 and non-GAAP EPS of $3.56 to $3.62. Those numbers alone will not be enough to restore confidence. Investors need to see concrete evidence that Intuit can defend its pricing power and user base against the AI onslaught — and that the legal probes do not lead to lasting reputational or financial damage. Until then, every news headline about a new AI tax tool is likely to send the stock lurching lower.