Intuit Stock Analysis! Generational Buying Opportunity?

Added: 2026-05-22

[00:00:00]Intuit just reported earnings. The stock is down 13% in the after hours. It's down 43% over the last 5 years. That was one of the best performing stocks of all time. It was considered as a high-quality compounder, but it has pretty much given up all of its gains over the last 5 years. The report wasn't actually bad at all, but the stock went down anyway, so I'm going to talk about it, give you my opinion, and I really hope you enjoy it as always. Now, Intuit owns four main brands, you could say.

[00:00:30]They own TurboTax. This is the most popular one. They own Mailchimp, which I believe is a service to send targeted emails from businesses to potential customers. They have Intuit QuickBooks, which is a way to track your expenses, so you hook it up your credit card, debit card, bank account, and it tracks which one is your income, which one is your expenses, so it automates all the accounting stuff. And then, they have Credit Karma, which is a place where you check your credit score for free. And when you check your credit score, they try to advertise you credit cards and and loans and insurance and other products, and they get commissions based on them. It's a very, very profitable platform, and it's actually growing really, really well. Now, looking at the report, it was really good again. They beat on revenues, beat on earnings per share, they raised guidance earnings per share, raised guidance on revenues.

[00:01:20]Everything was green. Everything was really, really good, but the stock went down. They're even going to cut 17% of their full-time workforce because they're finding efficiencies from AI.

[00:01:32]This is something we've seen from Meta, we've seen from Amazon, we've seen from Microsoft, and even Intuit with 17% of the workforce. So, AI is making the company more and more efficient, and that's really good for the company in general. But if you look at the pace of the growth, so the pace of revenue growth, it's been deteriorating. From 20% revenue growth to 17%, 17%, and this quarter, it was only 10% from 20% to 10%. This is a 50% drop in like two quarters. This is a massive massive drop for a company like Intuit. But if you look at the segments of Intuit, for example, Credit Karma, which was the growth engine for the company, it used to grow 35%. It went to 26, 23. This quarter was only 15%. This is really really weak. Same thing with TurboTax, which is the highlight or the legacy product of the company. From 17% growth to 7%. So the growth is absolutely deteriorating for a company like Intuit and people are mistaking it that maybe AI is actually disrupting the business.

[00:02:38]And it could be that AI is disrupting the business, but I think the company is facing more and more competition in general without even taking into account AI. For example, Credit Karma, in my opinion, has no moat, no competitive advantage. You can check your credit score within your bank like Chase gives you your own credit score. You have Wells Fargo gives you your own credit score. SoFi gives you your credit score.

[00:03:01]You don't really need Credit Karma to go check your credit score and for example, to sell you on credit cards or things like that. So again, this one for example, doesn't have much of a competitive advantage, but TurboTax, the legacy product, has been getting weaker and weaker. In fact, the total TurboTax accounts, they are expected to decline 2%. That has never happened before. And the TurboTax share of e-filing to decline 1 point. As the paying nothing customers, which they pretty much file for free, it's declined to 7 million from 8 million. So it declined by 1 million people. So again, people are clearly finding an alternative. You could even sometimes file directly with the IRS if if you don't have anything complicated. And there's way more competition in general and people believe the company has no moat. But I believe that's likely due to two reasons. The first one is the company is trying to transition more and more from TurboTax do-it-yourself to TurboTax Live. I believe TurboTax Live is whenever you're actually talking with someone, you have an accountant, you have someone a specialist that you can actually talk to on video, they can look at your taxes, you can ask them questions, they can answer your questions, and it could you just feel better about filing taxes. This area for them has been growing in a major major way. It went from like 15% of revenues now it's like 41% of the revenues. It's higher margins, but it's lower in general, and that has been affecting the mixture of the growth, but this is what the company is transitioning into, and I believe that could somehow give them a better competitive advantage against AI because if you're talking with someone and you're dealing with someone, you sometimes feel better asking a human question versus asking Claude and or ChatGPT for them to do your taxes. But I believe the biggest mode for the company isn't really TurboTax. It's more about QuickBooks Self-Employed or QuickBooks in general. Now QuickBooks again it tracks your payments on your credit card, debit cards, any transaction. You can categorize them only one time. So you go on your website, you tell them, "Okay, McDonald's is food." You know, sometimes it does it automatically.

[00:05:10]Whatever kind of subscription is some subscriptions for my business. This is personal, this is business. So you could do it one time or you could actually have someone from their team physically categorize it for you. It does all the work for you. And once it's categorized, then whenever you make a transaction that's familiar, for example, Amazon, that's let's say personal, gym is personal, this is business, this is personal, and it pretty much fixes everything. And after it categorizes everything throughout the years, you can click one button and all the data goes from self-employed into TurboTax for you to file your taxes. So this is a very simple solution for most people. I have used this solution before when I did not have a more complex situation, and it was very efficient. It was very very good, and I was really impressed with this technology, and I don't see how ChatGPT and Claude are going to disrupt it unless you could also hook up your credit card to ChatGPT and Claude, and they're going to track your expenses, and they're going to transfer it to some way for you to file your taxes. And let's say they can do that, okay? You'll have no audit protection from Claude or ChatGPT and those people. Whenever you sign up for a higher tier membership in TurboTax, you have something called like an audit protection, where they're looking where a human being if if CPA is looking at your report, you're looking at everything you did, all your filings, and everything. And he's pretty much looking at the risk of potential audit.

[00:06:36]And if it passes his risk profile and everything he looks at, they give you like a I believe it's like a maximum of a million dollars or 500,000.

[00:06:46]But if you if you get audited, and you say you have to pay, I don't know, 50,000 or 70,000, they cover it under this specific plan. You don't have this kind of audit protection in ChatGPT or Claude, but you have it from a professional within TurboTax and QuickBooks Self-Employed. So, I believe this is where the company has a moat has a competitive advantage. I don't think Mailchimp has a competitive advantage. I don't think Credit Karma has a competitive advantage, but the real competitive advantage, in my opinion, is through TurboTax and QuickBooks. And if you input all the data and you've been using them for years, you will likely keep on using them for many years to come. The company believes they only have a 5% penetration. I believe that's globally. So, the total addressable market for them is absolutely massive.

[00:07:35]Now, if we look at what the company has guided, it's only 11 to 12% growth for the next quarter. This company used to grow 20, 25, 30% revenues. Now it's only growing 11 to 12% and this is natural over time as the company is becoming more and mature and it's becoming larger and it's reaching a larger percentage of the population. It's not going to grow 20, 25% forever, but still the trajectory is on the way down and it's not a great trajectory at all. I would personally look for fiscal year 2027 for them and are they going to go to the single digits? If they did, then to me that would uh you could say kind of be a red flag for the company. Uh they did purchase about 1.6 billion of shares and they have a new 8 billion authorization program and they clearly believe the stock is undervalued. Now if you look at the PE ratio of the company, it's now trading at about 16 times earnings. This is a company that used to trade at 40 times, 35 times just because it was a quality company. Well, now you could buy the same stock for 16 times earnings. It has all its gains over the last 5 years and if you really been investing over the last few years and you remember the hype around Intuit, that was the stock that never goes down. Yet now it's crashing like never before. So it's really funny how fast the sentiment changes from an AI winner to an AI loser and maybe someday it will potentially be perceived as an AI winner again. But 16 times earnings is not expensive at all for a company that's growing earnings per share 14%, 15%. It used to grow 19, now the expectations is 14 to 15. I think with the efficiencies around AI, they can drive margins a little bit higher and if revenue growth is 11 to 12%, they should be able to put up 14, 15% in earnings per share. So based on those assumptions, I believe the stock is undervalued for what it is. Yes, they have some stock-based compensation, but you could see it as a percentage of cash from operations, it's been decreasing over time, and they've been skyrocketing in terms of cash from operations. But, I believe again the stock is undervalued to me. It's really hard to determine how big the AI disruption is going to be. I believe for basic tax filing, basic stuff, W-2, maybe, you know, it will be disrupted in this case where you could put it in cloud, and cloud will file it for you. But, if it gets to a little bit more complicated stuff, you have a rental property, you have maybe an S corp, you have an LLC, you have more compliance in general. Uh this is where TurboTax Live comes in where you could actually talk with someone face-to-face, you could deal with them, they can look at your returns, they could they give you their opinion, and I believe that connection has a place in society. Like, AI is not going to be able to replace this connection. There will be certain things that you will feel better with speaking to someone than just speaking to to some chatbot on the internet. So, that's my opinion on Intuit. Hope you enjoyed it. It was not fashion advice.

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