INTU - Understanding Intuit's 2 Most Important 'Risks'

2024-06-18 18:18:32 ET

Summary

• Many believe Intuit Inc. has two main terminal risks: AI and the IRS developing a competing offer.
• I go over these risks and explain why I don't think they are really risks.
• I also review the company's valuation to judge whether the recent weakness is an opportunity.

Introduction

The software industry is not currently experiencing its best moment. Investors believe that the benefits of artificial intelligence ("AI") will either…

1. Take a long time to accrue to software businesses, or

2. Be a net negative due to its disruptive force.

To this, we must add that the spending environment could be better, leading many software businesses to have a somewhat challenging earnings season....

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