Software Companies' Shares Plummet Amid AI Risks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 04 2026
0mins
Should l Buy INTU?
Source: stocktwits
- Deteriorating Market Sentiment: As concerns about the risks of AI tools intensified, shares of many established software companies fell sharply on Tuesday, with Intuit down approximately 11%, Adobe down 7%, and Salesforce down 6%, indicating market worries about traditional software demand.
- Valuation Pressure: According to a Bloomberg report, JPMorgan analyst Toby Ogg noted that software companies' valuations are being punished before they can prove that AI will drive growth, with market sentiment becoming unusually harsh and investor interest in buying the dip significantly muted.
- AI-Driven Sector Declines: Following the introduction of a new AI legal automation product by Anthropic, a broad selloff occurred across software, financial services, and asset management sectors, as investor concerns about AI capabilities potentially undermining traditional software demand escalated, leading to a decline in market confidence.
- Pricing Structure Risks: Ogg highlighted that seat-based pricing models could be impacted by AI-driven efficiencies, as reduced needs for multiple logins may weaken this structure's sustainability, further exacerbating market concerns regarding the software industry.
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Analyst Views on INTU
Wall Street analysts forecast INTU stock price to rise
18 Analyst Rating
16 Buy
2 Hold
0 Sell
Strong Buy
Current: 425.870
Low
700.00
Averages
814.59
High
880.00
Current: 425.870
Low
700.00
Averages
814.59
High
880.00
About INTU
Intuit Inc. offers a financial technology platform that helps consumers and small and mid-market businesses prosper by delivering financial management, compliance, and marketing products and services. It also provides specialized tax products to accounting professionals. Its offerings include TurboTax, Credit Karma, QuickBooks, and Mailchimp. Lacerte, ProSeries, and ProConnect Tax Online. Its Global Business Solutions segment serves small and mid-market businesses around the world, and the accounting professionals who assist and advise them. Its Consumer segment serves consumers and includes do-it-yourself and assisted TurboTax income tax preparation products and services sold in the United States and Canada. Its Credit Karma segment serves consumers with a personal finance platform that provides personalized recommendations for credit card, home, auto, and personal loan, and insurance products. Its ProTax segment serves professional accountants in the United States and Canada.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Significant Market Influence: Known for his successful predictions during the 2008 financial crisis, Burry's comments often trigger sharp trading; recently, his remarks on Fannie Mae and Freddie Mac led to a 50% surge in their shares, showcasing his market impact.
- AI Threat and Network Effect: Burry noted that while Intuit faces AI threats, its product network effect remains attractive, suggesting that certain software stocks may rebound in the current market environment, although his interest in ServiceNow's investment remains unclear.
- Tech Market Turmoil: A wave of new AI tool launches from Anthropic and concerns over overheated tech valuations have hammered software stocks, with Atlassian, Workday, and Zscaler shares dropping about 70% and 40% respectively in Q1, while Microsoft saw a 24% decline, reflecting market uncertainty.
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See More
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- Declining Bond Yields: The 10-year T-note yield fell by 8 basis points to 4.35%, reflecting market concerns that the ongoing war in the Middle East may lead to fuel shortages, thereby suppressing inflation expectations and potentially keeping the Fed from raising interest rates in upcoming meetings.
- Rising Oil Prices: Crude oil prices surged over 1% to a three-week high due to Iranian attacks on shipping, with fears that the closure of the Strait of Hormuz could disrupt global oil supplies, potentially driving prices to exceed the 2008 record high.
- Energy Infrastructure Damage: The International Energy Agency reported that more than 40 energy sites across nine Middle Eastern countries have been severely damaged, which could prolong disruptions to global supply chains after the war ends, further impacting international market stability.
See More
Burry Sees Rebound Potential in Intuit and ServiceNow Stocks
- Software Stock Rebound Outlook: Burry highlighted that Intuit (INTU) and ServiceNow (NOW) are currently at “interesting” price levels after significant declines, indicating his optimism for a rebound despite INTU's 36.6% and NOW's 32% year-to-date drops.
- Significant Market Influence: Known for his successful predictions during the 2008 financial crisis, Burry's comments often trigger sharp trading; recently, his remarks on Fannie Mae and Freddie Mac led to a 50% surge in their shares, showcasing his market impact.
- AI Threat and Network Effect: Burry noted that while Intuit faces AI threats, its product network effect remains attractive, suggesting that certain software stocks may rebound in the current market environment, although his interest in ServiceNow's investment remains unclear.
- Tech Market Turmoil: A wave of new AI tool launches from Anthropic and concerns over overheated tech valuations have hammered software stocks, with Atlassian, Workday, and Zscaler shares dropping about 70% and 40% respectively in Q1, while Microsoft saw a 24% decline, reflecting market uncertainty.
See More
Mixed Close for US Stocks as Nasdaq Hits 7.75-Month Low Amid Middle East Tensions
- Divergent Market Performance: On Monday, the S&P 500 index fell by 0.39%, while the Nasdaq 100 hit a 7.75-month low, indicating market concerns over the Middle East situation, particularly exacerbated by a sell-off in chip stocks, which negatively impacted investor confidence.
- Declining Bond Yields: The 10-year T-note yield dropped by 8 basis points to 4.34%, reflecting market fears that the ongoing war in the Middle East could lead to fuel shortages, potentially suppressing expectations for Fed rate hikes and highlighting economic growth uncertainties.
- Rising Crude Oil Prices: Crude oil prices surged over 3% to a three-week high due to Iranian attacks on the Strait of Hormuz, indicating severe threats to global energy supply chains, which could lead to soaring prices in the future and impact the global economy.
- Weak Manufacturing Activity: The Dallas Fed manufacturing activity survey fell to -0.2, below the expected 2.0, reflecting signs of economic slowdown that could influence corporate investment decisions and future economic growth.
See More
US Stock Market Declines Amid Rising Oil Prices
- Oil Price Surge Impacts Markets: The S&P 500 Index fell by 0.75%, the Dow Jones Industrial Average by 0.21%, and the Nasdaq 100 by 1.18% as the market reacts to the first oil settlement exceeding $100 since 2022, highlighting concerns over rising energy costs amid ongoing supply chain risks.
- Uncertain Fed Policy Outlook: Federal Reserve Chair Jerome Powell noted that while the central bank is monitoring the surge in energy prices, its tools to address supply-side shocks are limited, with markets pricing in only a 3% chance of a 25 bp rate hike at the April meeting, indicating investor uncertainty about future monetary policy.
- Escalating Middle East Tensions: US and Israeli forces continue military operations in Iran, with the Pentagon preparing for weeks of ground operations as approximately 3,500 sailors and Marines arrive in the region, potentially exacerbating global energy supply issues.
- Positive Bond Market Reaction: The 10-year Treasury yield fell to 4.330% as speculation grows that the ongoing conflict in the Middle East may lead to fuel shortages, offsetting inflation fears and supporting Treasury prices amid declining inflation expectations.
See More
Mixed U.S. Stock Indices Amid Rising Oil Prices
- Mixed Stock Performance: The S&P 500 Index fell by 0.29%, while the Dow Jones Industrial Average rose by 0.26%, and the Nasdaq 100 Index decreased by 0.67%, indicating a complex market reaction to Federal Reserve policies and international tensions.
- Rising Oil Prices: Crude oil prices surged over 2% to a three-week high due to disruptions in oil and gas flows through the Strait of Hormuz caused by the Iran conflict, which could negatively impact global economic growth.
- Weak Manufacturing Activity: The Dallas Fed manufacturing activity index dropped from -0.4 to -0.2, falling short of the expected increase to 2.0, suggesting challenges in economic recovery that may influence future policy decisions.
- Escalating International Tensions: U.S. and Israeli military actions against Iran have intensified, with 3,500 sailors and Marines deployed to the Middle East, potentially leading to further volatility in energy markets and impacting global supply chains.
See More
US Stocks Rise as Oil Prices Hit Three-Week High
- Market Gains: The S&P 500 Index rose by 0.58%, the Dow Jones Industrial Average increased by 0.91%, and the Nasdaq 100 Index climbed by 0.30%, reflecting a positive market sentiment amid expectations that the Fed may keep interest rates unchanged.
- Declining Bond Yields: The 10-year Treasury note yield fell by 10 basis points to 4.33%, driven by concerns that the ongoing war in the Middle East could lead to a fuel shortage, potentially hindering global economic growth and influencing the Fed's future rate decisions.
- Rising Oil Prices: Crude oil prices surged over 2% to a three-week high due to Iranian attacks on shipping, raising fears that the closure of the Strait of Hormuz could disrupt global oil and gas supplies, which may lead to significant price increases.
- Manufacturing Activity Decline: The Dallas Fed's manufacturing activity survey dropped by 0.4 to -0.2, falling short of the expected increase to 2.0, indicating signs of economic slowdown that could impact future investment decisions.
See More
Middle East Tensions Impact Global Markets
- Market Recovery: The S&P 500 Index rose by 0.42%, the Dow Jones Industrial Average increased by 0.64%, and the Nasdaq 100 Index gained 0.32%, indicating a short-term market rebound amid escalating tensions in the Middle East, as investor confidence in future economic growth shows signs of recovery.
- Declining Bond Yields: The 10-year T-note yield fell by 8 basis points to 4.35%, reflecting market concerns that the ongoing war in the Middle East may lead to fuel shortages, thereby suppressing inflation expectations and potentially keeping the Fed from raising interest rates in upcoming meetings.
- Rising Oil Prices: Crude oil prices surged over 1% to a three-week high due to Iranian attacks on shipping, with fears that the closure of the Strait of Hormuz could disrupt global oil supplies, potentially driving prices to exceed the 2008 record high.
- Energy Infrastructure Damage: The International Energy Agency reported that more than 40 energy sites across nine Middle Eastern countries have been severely damaged, which could prolong disruptions to global supply chains after the war ends, further impacting international market stability.
See More
