Intuit Inc.

🇺🇸NASDAQ Global Select
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Intuit Inc. stock analysis INTU overview
Very Bullish +78

Why is Morgan Stanley bullish on 2 SaaS stocks everyone sold?

📈 Morgan Stanley recommends buying Intuit (INTU) and Salesforce (CRM), which have recently been sold off heavily by the market.

🧠 The bank's bullish stance is contrarian, arguing that the AI-driven panic regarding subscription software values has overshot current realities.

💰 Intuit reported fiscal Q2 revenue of $4.7 billion (+17% YoY) and non-GAAP EPS of $4.15 (+25% YoY), driven by strong TurboTax growth.

🔄 Despite fears that AI agents could automate tax work, Intuit's core businesses remain robust, supporting Morgan Stanley's 580 price target.

📉 The software sector has fallen roughly 33% from October 2025 levels after a rout wiped out $830 billion in market value over six days.

🤖 Salesforce is highlighted for its rapid monetization of AI features, with Agentforce and Data 360 ARR exceeding $2.9 billion (+200% YoY).

💡 Morgan Stanley argues the market incorrectly assumes AI will cause "extinction" rather than adaptation for incumbent software vendors.

📅 Intuit's upcoming April-quarter earnings report is expected to provide clarity on TurboTax durability and support multiple expansion.

⚠️ A key risk for Intuit is that AI compresses consumer tax software pricing, potentially stalling TurboTax growth for several quarters.

⚠️ For Salesforce, the risk lies in Agentforce/Data 360 ARR growth slowing or failing to translate into higher seat expansion and renewals.

📉 Keith Weiss, head of Morgan Stanley's software team, states that peak uncertainty has severely impacted Software multiples despite strong earnings.

🏆 Intuit was named Morgan Stanley's top pick in the software sector following the early 2026 sell-off.

🔗 The fear triggering the sell-off stems from Anthropic's Claude plugins potentially automating core tasks like legal, sales, and data analysis.

📊 Salesforce's strong fiscal 2026 results support the bank's view that incumbents can participate in the AI cycle rather than being displaced.

📈 Morgan Stanley believes investors are underestimating the ability of Intuit and Salesforce to win in the AI era.

⚖️ While the bearish case regarding AI pricing power is valid, the bank contends the market has gone too far in assuming disruption equals collapse.

💸 The February selloff was driven by existential concerns about subscription value rather than a breakdown in company fundamentals.

🔮 Upward estimate revisions are anticipated for Intuit as clarity emerges on TurboTax growth sustainability from future earnings data.

Bullish Signals
  • Intuit's core business remains robust with fiscal Q2 revenue growing 17% year-over-year and non-GAAP EPS up 25% to $4.15.
  • TurboTax continued to generate +12% growth despite a challenging tax season, demonstrating resilience.
  • Valuation near ~20x GAAP earnings presents an attractive entry point with potential for estimate upgrades following the April-quarter "clarity" catalyst.
  • Keith Weiss maintains a $580 price target for Intuit, implying about 58% upside from the current stock level.
  • Salesforce is demonstrating rapid monetization of AI features, with Agentforce + Data 360 ARR exceeding ~$2.9B and up over 200% year-over-year.
  • Analysts believe investors may have underestimated incumbent vendors' ability to participate in the AI cycle rather than being replaced by it.
  • The software sector has already fallen roughly 33% from October 2025 levels, creating significant downside risk that has been priced into these names.
Risk Factors
  • The article highlights that Intuit faces the risk of AI compressing consumer tax software pricing, which could stall TurboTax growth for multiple quarters.
  • A key concern is that if AI replaces paid tax work, it could lead to a collapse in Intuit's pricing power and force earnings downgrades.
  • Salesforce carries the risk that its AI features (Agentforce/Data 360) do not translate into durable expansion or renewals, potentially causing ARR growth to decelerate sharply.
  • There is a significant downside catalyst if customers do not expand seats or renew at higher rates for Salesforce's new AI offerings, confirming fears of AI cannibalizing subscription value.
  • The broader SaaS sector has already seen market multiples compress severely, with the software sector falling roughly 33% from October 2025 levels due to existential fears about AI disruption.
  • Morgan Stanley warns that the 'extinction' thesis could become reality if investors stop assuming adaptation and start pricing in a collapse of traditional SaaS value.
Full Analysis
Morgan Stanley is advocating for a contrarian position on Intuit (INTU) and Salesforce (CRM), arguing that an AI-driven panic has caused significant market overreaction in the SaaS sector. The bank's thesis posits that while investors fear AI agents could render traditional subscription software obsolete, leading to compressed valuations, incumbent vendors are instead successfully adapting and monetizing these technologies. This perspective follows a severe sell-off in early 2026 where approximately $830 billion was wiped out of software and services stocks over six trading days, triggered by fears surrounding Anthropic's new Claude plug-ins automating tasks across legal, sales, marketing, and data analysis. For Intuit, the recommendation is driven by robust recent performance despite a noisy tax season; fiscal Q2 revenue rose 17% year-over-year to $4.7 billion, non-GAAP EPS increased 25% to $4.15, and TurboTax maintained a 12% growth rate. The company's valuation sits near 20x GAAP earnings, which Morgan Stanley views as attractive with an upcoming April-quarter report expected to provide clarity on the durability of TurboTax growth. Analyst Keith Weiss has raised the price target to $580, implying roughly 58% upside, citing strong growth across Global Business Solutions (up 18%) and Consumer revenue (up 15%). Similarly, Salesforce is seen as undervalued following the selloff, with the market treating AI as an existential threat rather than a growth opportunity. Morgan Stanley highlights that Salesforce is rapidly monetizing its AI features, with Agentforce + Data 360 annual recurring revenue exceeding $2.9 billion and surging more than 200% year-over-year in fiscal 2026. The core argument is that the sector has fallen roughly 33% from October 2025 levels based on an "extinction" hypothesis that may not reflect reality, suggesting that if investors shift from fearing collapse to pricing adaptation, these stocks could re-rate positively. The primary risks identified for both positions center on whether AI technology will actually cannibalize traditional revenue streams. For Intuit, the key risk is that AI compresses consumer tax software pricing or causes TurboTax growth to stall for multiple quarters, potentially forcing earnings downgrades. For Salesforce, the concern is that Agentforce and Data 360 ARR growth slows sharply while customers fail to expand seats or renew at higher rates, confirming that AI features are not translating into durable expansion. Morgan Stanley concludes that peak uncertainty has severely impacted software multiples, presenting an opportunity for investors who believe incumbents can participate in the AI cycle rather than being run over by it.