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Investor enthusiasm for all things artificial intelligence drove stocks of chipmakers and Big Tech to latest heights.
But the AI boom has also produced some unexpected winners. Intuit, maker of the favored TurboTax software, is one in all them. The stock has gained nearly 40 percent previously 12 months, outpacing the S&P 500's 20 percent rise. At $170 billion, its market valuation exceeds that of Goldman Sachs, Morgan Stanley and Citigroup.
Intuit is best known for its accounting and DIY tax filing software for small businesses. In recent years, the corporate has attempted to diversify through acquisitions. In 2020, the corporate purchased Credit Karma for $8.1 billion and in 2021, it purchased email marketing provider MailChimp for $12 billion. But it's Intuit's speak about AI that has the Wall Street bulls coming out.
The company believes AI could make processing U.S. tax returns—with their W-2s, 1098s, and other unclearly coded documents—easier. The company has introduced an AI assistant for all of its core products. In TurboTax, AI reduces the time it takes to file taxes by calculating deductions and answering questions on code changes. Likewise, the technology can provide personalized financial advice to Credit Karma users and help generate marketing content for purchasers on MailChimp. Chief Executive Sasan Goodarzi said in February: “The next pillar of growth is AI.”
Analysts expect sales growth of 12 percent for this fiscal yr through July, followed by 13 percent in the next two years.
But earning money with AI could prove easier said than done. Early reviews of AI chatbots were devastating. Inaccuracies are the predominant grievance. Intuit said AI didn’t complete or file a tax return in TurboTax: “If a TurboTax filer ever has a matter about their tax return, they’re all the time only one click away from an actual tax expert.”
As befits an AI proxy, Intuit doesn't look low-cost at 36x expected earnings. Smaller competitor H&R Block trades at a multiple of just 12.
But that premium has more to do with standard accounting than cutting-edge technology. Its accounting software, QuickBooks, is widely utilized by freelancers and small businesses and helps Intuit generate income year-round, while H&R Block's business is sort of entirely seasonal. Intuit's popularity amongst small business owners has supported its growth.
That's a greater reason than the AI hype to speculate within the stock.
