Market Overview - Investors are advised to be cautious following significant declines in software stocks, driven by fears of AI disruption to business models [1] - The indiscriminate selling in the software sector has made it challenging to determine where valuations will stabilize [1] Software Stock Performance - Wall Street has adopted a negative sentiment towards software-related companies, leading to a broad sell-off, including firms that primarily collect data [2] - Notable declines include ServiceNow, which fell nearly 7% (28% year-to-date), Salesforce down about 7% (26% year-to-date), and Intuit dropping nearly 11% (over 34% year-to-date) [2] Earnings and Valuation Concerns - Despite the declines, reported profits for software stocks have not collapsed; however, Wall Street is paying less for these earnings due to future uncertainties [3] - The shrinking price-to-earnings multiple presents a challenge for investors, as it is unclear how low valuations can go [4] Selectivity in Investment - Selectivity is crucial in the current market, with some investors shifting focus to companies that heavily invest in software, such as banks and industrials, although many of these stocks have already appreciated [4] - The CNBC Investing Club has made selective purchases, such as CrowdStrike, which is viewed as a cybersecurity provider less affected by the broader software sell-off [5] Market Dynamics - The market is characterized by a divide between "winners" (users of software) and "losers" (providers of software), suggesting that the pain may not extend beyond the software sector [5]

Stocks broadly sank on Tuesday as investors moved to dump shares of software companies amid fears that artificial intelligence tools could eat into those companies' businesses.On the S&P 500, the technology sector was by far the worst performer, leading the index to end the day lower by 0.8%. The Nasdaq Composite, which contains more technology companies, tumbled 1.4%.The selling came after AI startup Anthropic on Friday announced an automated agent that could complete legal, data analytics, finance and sal ...

Market Performance - The broad U.S. market started the year positively, with the SPDR® S&P 500® ETF (SPY) posting a gain despite some elevated volatility in the final week of January [1]

Group 1 - Intuit Inc. (NASDAQ:INTU) is recognized for its financial management, tax preparation, marketing, and personal finance solutions, with a recent emphasis on its new individual financial software [2] - The company is expected to perform better in the enterprise software sector, despite current market challenges, as indicated by Jim Cramer's commentary [1] - The IRS is phasing out competition to TurboTax, which may benefit Intuit's market position [2] Group 2 - There is a belief that certain AI stocks may offer greater upside potential compared to Intuit, suggesting a competitive landscape in the investment space [3]

Core Viewpoint - Intuit is experiencing a stock decline despite solid fiscal first-quarter results and a reaffirmed full-year outlook for double-digit revenue and earnings growth, attributed to broader market trends affecting software valuations [1][2]. Financial Performance - Intuit reported fiscal first-quarter revenue of approximately $3.9 billion, reflecting an 18% year-over-year increase, with non-GAAP earnings per share at $3.34, up 34% [3]. - The fastest-growing segment was Credit Karma, with revenue rising 27% year-over-year to $649 million, while the global business solutions segment saw an 18% increase to about $3.0 billion [4]. Growth Outlook - The company maintains its fiscal 2026 revenue growth guidance of 12% to 13% year-over-year, which is slower than the 16% growth reported in fiscal 2025, raising concerns among some investors [6][7]. - Intuit's conservative revenue guidance is consistent with past forecasts, suggesting potential for exceeding expectations in fiscal 2026 [7]. AI Integration - AI is seen as a potential catalyst for growth, with Intuit rolling out proactive AI agents that automate workflows, showing early signs of adding substantial value for customers [8]. - CEO Sasan Goodarzi highlighted that 2.8 million customers are utilizing AI agents, which are saving significant time and improving payment speeds [9]. Strategic Implications - The expansion of AI tools could create new revenue opportunities and increase customer retention by raising switching costs as users adapt to these technologies [10]. - Intuit's stock is viewed as undervalued, with a forward price-to-earnings ratio of 22, despite the recent sell-off [11].

Core Insights - Intuit Inc. (NASDAQ:INTU) is viewed positively by hedge funds, with Mizuho maintaining an Outperform rating and a price target of $875 despite recent share price declines due to AI disruption concerns [1] - Mizuho considers the fears regarding AI's impact on tax filing to be exaggerated, drawing parallels to earlier skepticism about OpenAI and ChatGPT, which was alleviated through Intuit's collaboration with OpenAI [2] Company Developments - Intuit has opened a new TurboTax flagship store in New York City's SoHo, expanding its physical presence from nearly 600 Expert Office locations to 20 TurboTax stores nationwide, enhancing the combination of digital tax filing and in-person expertise [3] - The company operates in four segments: Global Business Solutions, Consumer, Credit Karma, and ProTax, providing a range of financial management, payments, compliance, and marketing products and services in the US [4]

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Group 1 - The stock prices of American cloud companies declined in pre-market trading, with Intuit down by 3%, Adobe down by 2.3%, and Zscaler down by 1.6% [1]

Group 1 - U.S. cloud companies' stock prices declined in pre-market trading, with Intuit down by 3%, Adobe down by 2.3%, and Zscaler down by 1.6% [1]

Group 1 - Intuit shares declined by 3% [1] - Adobe shares fell by 2.3% [1] - Zscaler shares decreased by 1.6% [1]