Intuit "could bounce from here" after early year slump - Jefferies

Investing.com - Shares of Intuit slumped by more than 6% on Wednesday, in the latest leg lower for a software name that has stumbled in the early weeks of 2026.

The stock has retreated by nearly 10% so far this year, reflecting wider weakness in the broader technology sector stemming from fears around potential disruption from new artificial intelligence-enhanced products.

Bargain-hunting has also spurred on a recent rotation by some investors out of tech. The segment accounted for much of a record rally in global equities last year.

However, writing in a note to clients, analysts at Jefferies predicted that "downdraft" around Intuit -- the maker of tax preparation software TurboTax and accounting tool QuickBooks -- is "overdone."

"We continue to like Intuit as a top large-cap software pick," the analysts including Brent Thill and John Byun said in a note.

They argued that fears around the impact of "AI vibe coding," a modern programming approach where a developer describes what is wanted in natural language, and AI tools generate, refine, and debug the resulting code, are "exaggerated."

In particular, the need for total accuracy when preparing taxes means that federal regulators will demand that documents be done properly, adding that officials will likely "not tolerate AI hallucination as an excuse" for mistakes.

"Tax filers are unlikely to risk an audit, fines, or jail time, in order to save a relatively small fee for trusted tax software," the analysts wrote.

Meanwhile, Intuit is "early" in the $22 billion market for tax assistance services, with full-year revenue its TurboTax Live product amounting to only roughly 10% of this space, the analysts said. They added that the company is also just beginning to expand its offerings for mid-sized companies.

Intuit also remains committed to a multi-year acceleration toward 20% growth in its 2030 fiscal year, compared to its guidance for 12%-13% in its current financial year and 16% in fiscal year 2025, the analysts noted.

They highlighted that while the stock has also shown a "history of consistent positive returns," notching gains in 16 of the past 17 years, its valuation is still below its peers.

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