Intuit (INTU 0.03%) stock has fallen sharply so far in 2026, despite reporting a solid fiscal first quarter in November and reiterating its full-year outlook for double-digit revenue and earnings growth.
So why has Intuit taken a beating? It seems to be part of a broader market theme in which investors are rerating software stocks to lower valuations. Investors seem to be worried that, in an era of AI, their business models could be disrupted. In turn, many investors think that software companies should trade at lower valuation multiples.
But has Intuit's stock sell-off gone too far? After all, the stock is down 24% year to date.
Image source: Getty Images.
Robust recent results
If AI (artificial intelligence) does have the potential to disrupt Intuit, it's not showing up in the numbers yet.
Intuit said its fiscal first-quarter revenue was about $3.9 billion, up 18% year over year, and non-generally accepted accounting principles (non-GAAP) earnings per share was $3.34, up 34%.
Its fastest-growing business segment was its credit score and personal finances app Credit Karma, which saw revenue rise 27% year over year to $649 million. And Intuit's global business solutions segment, which represents revenue from products that serve small and mid-sized businesses and is by far Intuit's largest segment, saw revenue rise 18% year over year to about $3.0 billion.
Notably, while fiscal first-quarter revenue growth was still strong, it was slower than the 20% year-over-year growth Intuit reported in the fourth quarter of fiscal 2025.
A disappointing outlook, or not?
When the company reported its fiscal first-quarter results, Intuit reiterated its full-year guidance for fiscal 2026, with a range implying revenue growth of 12% to 13% year over year. Given that Intuit reported 16% year-over-year revenue growth in fiscal 2025, some investors may view management's guidance for slower growth as a sign of trouble ahead.
But investors should remember that Intuit is notoriously conservative when it comes to its revenue guidance. Indeed, for investors who follow the company closely, management's revenue guidance range might sound familiar; it's the exact same guidance management provided for revenue growth when it first provided guidance for fiscal 2025.
While there's no guarantee that Intuit reports results throughout fiscal 2026 that blow past its revenue forecast for the year, it's within the realm of possibilities.
Interestingly, the reason Intuit could see strong momentum again in fiscal 2026 is, in part, due to AI. Therefore, while some investors are fretting that it will disrupt Intuit's business, it's actually serving as a catalyst for now. While still early, there are some signs that AI can add substantial value for its customers. After rolling out a set of proactive AI agents designed to automate workflows on QuickBooks in recent months, this initiative is off to a strong start.
"We're continuing to see momentum with our virtual team of AI agents, with 2.8 million customers leveraging these agents to do the work for them," explained Intuit CEO Sasan Goodarzi in the company's most recent earnings call. Providing some specific examples, Goodarzi said Intuit's "accounting agent is saving customers up to twelve hours a month, and our payments agent helps customers get paid on average five days faster."
Additionally, the company has also launched payroll and sales tax agents that are similarly helping businesses.
As Intuit ramps up its AI tools across its platform, this could not only create new revenue opportunities for the company but it could also increase the switching costs as users learn to interact with these tools, in effect boosting customer retention. Of course, tools like these will likely also be key selling points, potentially helping the company land new customers.
NASDAQ: INTU
Key Data Points
Overall, I believe this sell-off in Intuit stock is a good time to buy shares. Showing how attractive the stock's valuation is, its forward price-to-earnings ratio is just 22. For a company with a diversified set of lucrative software platforms, strong double-digit earnings growth, and a potential catalyst for its business stemming from AI, I think shares are undervalued.
Of course, an investment in Intuit isn't without risks. The tax-filing portion of its business is always at risk of disruption from the U.S. government's tax-filing process. In addition, AI could become a greater threat than a catalyst if it enables other companies to quickly develop new, more efficient bookkeeping and tax-filing solutions. Still, I believe the stock's lower price after its sell-off largely prices in these risks.
