Intuit Stock Has Been Crushed This Year. How Much Further Could It Fall?

Shares of financial software maker Intuit (NASDAQ: INTU) have taken a massive beating this year. While the S&P 500's year-to-date return is about flat, Intuit stock has plunged. Indeed, shares traded as low as $349 at one point this year. While the stock is now trading well above this low, it's still down more than 30% year to date.

This dramatic underperformance comes as investors grow increasingly concerned about the potential for artificial intelligence (AI) to disrupt software business models like Intuit's.

But the company's actual financial results haven't been negatively impacted by AI so far. If anything, Intuit has benefited from AI.

So, what should investors make of the recent volatility in Intuit stock?

Image source: Getty Images.

Robust growth despite the fears

Based on the market's severe reaction, you might assume Intuit's core business is struggling.

But the underlying business continues to execute very well.

In its second quarter of fiscal 2026, the company delivered robust revenue growth, with the top line rising 17% year over year to $4.7 billion.

And the company is highly profitable, generating $6 billion in free cash flow in fiscal 2025. Cash flow like this can help the company to invest heavily in its own platforms to fortify its competitive advantages with its own AI features -- and it's doing exactly that.

The company has rolled out AI agents to assist its customers, and Intuit CEO Sasan Goodarzi said in its most recent earnings call that more than three million customers have "leveraged agents to do the work for them..."

"In January alone, our accounting agents saved time and delivered impact for our customers by categorizing over 237 million transactions," Goodarzi added. "This represents over half of all the transactions categorized that month."

If you were to ask management if AI is a threat, they'd probably say it's a catalyst.

"Our disruptive AI-native mid-market platform is fueling the success of growing businesses and we are further scaling our investment, product innovation, and go-to-market motions to accelerate customer adoption," Goodarzi said in the company's fiscal second-quarter earnings call.

Don't get too excited

However, Intuit's forward-looking guidance points to a near-term slowdown. Management forecast Intuit's upcoming fiscal third-quarter revenue to grow by approximately 10% year over year, representing a notable deceleration from its most recent period.

While the company is notoriously conservative with its guidance, this is still something worth watching.

Ultimately, however, it is possible that Intuit proves -- one quarter at a time -- that its business won't be impaired by AI and may even benefit from it.

But the future remains uncertain, and the market is clearly not ready to give the software giant the benefit of the doubt. When technological shifts occur this rapidly, investors often demand a wider margin of safety.

Understanding valuation risk

This brings us to the core issue driving Intuit's recent decline: valuation risk.

For stocks trading at premium valuations, the underlying business doesn't have to fail for the stock price to collapse.

Sometimes, the market simply decides that a company no longer deserves such a robust premium, and the stock gets rerated lower even as the fundamentals continue compounding nicely.

Before this 2026 software sell-off began, Intuit stock was arguably priced for absolute perfection. Even after the recent haircut, the stock still commands a price-to-earnings ratio of about 30. A valuation like this assumes years of steady double-digit earnings growth.

But with AI introducing a structural unknown into the software landscape, that predictability is exactly what investors are questioning.

If the market continues to recalibrate what it is willing to pay for software earnings in an AI-driven world, shares could remain under pressure.

Prepare for volatility

So, how much further could Intuit stock fall?

While there's no way to know exactly what the stock will do in the near term, investors should be prepared for a bumpy ride. The risk of AI disrupting software is not going anywhere, so the stock's elevated volatility is likely here to stay.

It is entirely possible that shares could test those $349 levels again if broader market sentiment sours or if the company's growth rate shows further deceleration.

With all of this said, shares are certainly more attractive today than they were last year. For investors who believe Intuit will successfully navigate the AI transition, a small position could make sense here given the company's recent robust revenue growth.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.