Intuit Shares Under Pressure Amid AI Sector Disruption

Intuit US4612021034

The US software sector is facing its most challenging start to a year in recent memory, with a widespread sell-off driven by the emergence of powerful new artificial intelligence tools. Established financial software leaders like Intuit are now under significant pressure to demonstrate the resilience of their business models against this disruptive technological shift.

Beneath the surface of the stock's decline, Intuit's operational performance remains solid. The company reported first-quarter results that exceeded expectations and reaffirmed its full-year outlook, projecting revenue growth between 12% and 13%. Its gross profit margin stands at a robust 80.7%. Furthermore, Intuit is making substantial strategic investments to embrace the new technology, including a multi-year agreement with OpenAI valued at over $100 million to integrate AI models into its software suite. Additional initiatives, such as a partnership with Circle for stablecoin technology and the expansion of AI-powered tax advisory services, underscore its proactive approach.

Widespread Anxiety Triggers Sector Decline

A primary driver behind the broad software sector downturn is apprehension over AI-driven competition. The release of Anthropic's "Claude Cowork" in mid-January has reignited these market fears. A Morgan Stanley index tracking Software-as-a-Service companies has fallen approximately 15% since the beginning of the year. Intuit has been notably affected: its stock declined around 16% last week alone, trading near a nine-month low. Since the start of the year, the share price is down more than 14%.

Analyst Outlook Presents a Mixed Picture

Despite the sharp price correction, the prevailing sentiment among market analysts remains largely positive—a notable contrast to the current trading reality. The average price target sits near $795, suggesting significant potential upside from current levels. However, some cautionary notes have emerged. Goldman Sachs initiated coverage with a "Neutral" rating, citing uneven execution within the tax business. Wells Fargo downgraded the stock from "Overweight" to "Equal Weight" and substantially reduced its price target from $840 to $700.

The future trajectory of Intuit's stock will likely hinge on whether its strong fundamental metrics and dedicated AI investments can eventually outweigh the broader market anxieties. The company's next major test will be its quarterly earnings report in February.

@ boerse-global.de | US4612021034 INTUIT