Intuit built a $21 billion business on the idea that taxes and bookkeeping are too painful to do yourself. Now AI can do both for free, and the market is pricing in an existential reckoning.
The stock cratered 19% on Thursday to a five-year low around $310, capping a 50% decline this year. The catalyst: Intuit announced it is cutting 17% of its workforce - over 3,000 people - while simultaneously reporting a quarter that beat on earnings. CEO Sasan Goodarzi insists “none of it had to do with AI” and is about streamlining operations. Investors are not buying it.
Here’s the thing: the business is still growing. Q3 revenue hit $8.6 billion (up 10%), QuickBooks Online grew 22%, and Intuit raised its full-year guidance. But TurboTax’s forecast got trimmed, IRS filings shrank for the first time since the post-COVID era, and ChatGPT and Claude now offer tax guidance powered by TurboTax itself.
Intuit says AI is a tailwind. The stock price says otherwise.
Here's how the community voted
The quarter was fine. Revenue grew 10% to $8.6 billion, non-GAAP EPS of $12.80 beat the consensus by over 2%, and Intuit raised full-year revenue guidance to $21.3-21.4 billion with 18% EPS growth. QuickBooks Online grew 22%, Credit Karma grew 15%, and GAAP operating income hit $4 billion. This is not a business in decline.
At ~13x forward earnings, Intuit trades at less than a third of its historical average P/E of ~45x. Analysts still rate it Strong Buy with an average target around $590, implying roughly 90% upside from current levels. The company bought back $1.6 billion in stock in Q3 alone and just authorized a new $8 billion repurchase program.
Intuit’s AI moat is its data, not its code. The company sits on decades of actual tax filings, small business transactions, and credit data that generic LLMs cannot replicate. Intuit has signed multi-year AI deals with both Anthropic and OpenAI, integrating TurboTax tools into ChatGPT and Claude and turning potential disruptors into distribution channels.
TurboTax is the reason Intuit exists, and the outlook just got worse. The company trimmed its TurboTax revenue forecast to $5.28 billion from $5.31-5.33 billion, and total IRS filings dropped nearly 30 basis points this season, the steepest contraction since the post-COVID era. If the core franchise is shrinking, no amount of QuickBooks growth can compensate.
The 17% workforce cut tells a different story than “nothing to do with AI.” Intuit is closing offices, taking $300-340 million in restructuring charges, and shedding 3,000 roles across all four brands. When a company slashes staff the same day it beats earnings, it is preparing for a future with less revenue, not more.
General-purpose AI can now do what TurboTax charges for. ChatGPT, Claude, and Gemini all walk users through deductions, classify expenses, and explain tax rules on demand. Intuit’s response is to partner with these platforms, but that looks more like a defensive pivot than a growth strategy. The 50% YTD decline says the market sees commoditization, not opportunity.
The quarter was fine. Revenue grew 10% to $8.6 billion, non-GAAP EPS of $12.80 beat the consensus by over 2%, and Intuit raised full-year revenue guidance to $21.3-21.4 billion with 18% EPS growth. QuickBooks Online grew 22%, Credit Karma grew 15%, and GAAP operating income hit $4 billion. This is not a business in decline.
At ~13x forward earnings, Intuit trades at less than a third of its historical average P/E of ~45x. Analysts still rate it Strong Buy with an average target around $590, implying roughly 90% upside from current levels. The company bought back $1.6 billion in stock in Q3 alone and just authorized a new $8 billion repurchase program.
Intuit’s AI moat is its data, not its code. The company sits on decades of actual tax filings, small business transactions, and credit data that generic LLMs cannot replicate. Intuit has signed multi-year AI deals with both Anthropic and OpenAI, integrating TurboTax tools into ChatGPT and Claude and turning potential disruptors into distribution channels.
TurboTax is the reason Intuit exists, and the outlook just got worse. The company trimmed its TurboTax revenue forecast to $5.28 billion from $5.31-5.33 billion, and total IRS filings dropped nearly 30 basis points this season, the steepest contraction since the post-COVID era. If the core franchise is shrinking, no amount of QuickBooks growth can compensate.
The 17% workforce cut tells a different story than “nothing to do with AI.” Intuit is closing offices, taking $300-340 million in restructuring charges, and shedding 3,000 roles across all four brands. When a company slashes staff the same day it beats earnings, it is preparing for a future with less revenue, not more.
General-purpose AI can now do what TurboTax charges for. ChatGPT, Claude, and Gemini all walk users through deductions, classify expenses, and explain tax rules on demand. Intuit’s response is to partner with these platforms, but that looks more like a defensive pivot than a growth strategy. The 50% YTD decline says the market sees commoditization, not opportunity.
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While 13x P/E is intriguing, the technological risk is too great. I found Claude pitching in more and more with complex tax questions, which Turbotax had very weak resources for even after paying for the live agent support and spending countless hours going through their online community and basically any and all documentation. Then, you find out that if you pay for a "state download" while using the local software version of Turbotax, that doesn't include the filing. The filing was an extra cost after paying for state "downloads." They basically nickel and dime you at every step, and that pricing power has always existed, but they're pushing it too far in a way that in my humble opinion sacrifices long term customer retention but boosts short term margin because it's a hassle to change tax software especially once you're doing something more complicated.
Claude and other AI platforms may reduce the value of Turbotax. Ironically, if they kept prices lower, and integrated more of these capabilities (while incurring legal costs for mistakes - a reason why they can't easily adopt all of the advancements), and actually found ways to cut prices over time, they would have a real chance. I feel they're just pulling on every pricing lever possible and drowning in profitability, but sacrificing the long term.
I'm just a different guy and my bias will show. I wouldn't be running it the way they are. Even if Turbotax can't fully implement AI due to legal risks, there are other ways they can run their business for the long term. Executives usually don't look that far out.
Note that, I recall years ago reading about intuit lobbying against any kind of simplification at a government level that might reduce the need for their software... IMHO if this type of behaviour is required for your business to exist, it's probably not fitting my definition of quality