Core Viewpoint - The software sector is experiencing its worst start to the year since 2022, with a 15% decline following an 11% drop last year, raising concerns about future growth prospects due to emerging AI competition [1][3]. Group 1: Market Performance - A group of Software as a Service (SaaS) stocks tracked by Morgan Stanley has seen a significant downturn, marking the worst annual opening since 2022 [1]. - Intuit Inc., the parent company of TurboTax, experienced a 16% drop, while Adobe and Salesforce saw declines exceeding 11% [3]. - The Nasdaq 100 index is nearing historical highs, yet companies like ServiceNow Inc. are at multi-year lows, highlighting a widening gap in performance within the tech sector [9]. Group 2: AI Competition - The launch of Anthropic's AI collaboration tool "Claude Cowork" has intensified fears of disruptive competition in the software market, reminiscent of concerns from 2025 [3][8]. - Claude Cowork allows users to automate tasks such as creating spreadsheets and generating reports, significantly enhancing productivity for both programmers and non-programmers [4][6]. - The tool's rapid adoption has led to a notable increase in its user base, with a 12% rise in global daily active users since last month [7]. Group 3: Investor Sentiment - Many investors are losing confidence in holding software stocks, believing there are no catalysts for valuation recovery despite lower price multiples [8]. - Concerns about the attractiveness of AI products from established software companies are growing, as many have not demonstrated significant revenue impact from their AI offerings [9]. - The expected profit growth for software and services companies in the S&P 500 is projected to slow to 14% in 2026, down from an estimated 19% in 2025 [9]. Group 4: Valuation Trends - Software companies are seeing their valuations decline, with a forward price-to-earnings ratio of 18 times, the lowest in history compared to an average of over 55 times in the past decade [10]. - The traditional high valuation of software companies, based on subscription models and recurring revenue, is being challenged by the emergence of AI agents capable of performing tasks more efficiently [13].

Core Viewpoint - Intuit's stock price has significantly declined, indicating a persistent downward trend that began in July of the previous year [1] Group 1: Stock Performance - Intuit's stock price peaked at $810 and has fallen to a low of $545, representing a 32% decrease from its all-time high [1] - The company's market capitalization has decreased from $226 billion to $150 billion, resulting in the loss of billions of dollars in value [1]

Core Viewpoint - Intuit Inc. is considered a strong long-term investment, but recent downgrades and challenging comparisons for future growth have raised concerns about its near-term performance [1][3]. Group 1: Analyst Ratings and Price Targets - Wells Fargo downgraded Intuit to Equal Weight from Overweight with a reduced price target of $700, down from $840, citing tough comparisons for growth heading into 2026 [1]. - TD Cowen initiated coverage with a Buy rating and a price target of $802, expecting Intuit to exceed consensus expectations and arguing that AI-related risks are overstated [2]. - Truist also initiated coverage with a Buy rating and a price target of $739, emphasizing Intuit's strong market position and diverse fintech offerings [3]. Group 2: Company Overview and Market Position - Intuit provides a range of financial management, payments, compliance, and marketing products and services in the US, including well-known brands like TurboTax, Credit Karma, QuickBooks, and Mailchimp [3]. - Despite the potential of Intuit as an investment, some analysts believe that other AI stocks may offer greater upside potential with less downside risk [4].

Core Viewpoint - The release of Claude Code has reignited concerns about the disruption of the software industry by AI, leading to the worst annual start for U.S. software stocks in years, with a 15% decline in a basket of SaaS stocks tracked by Morgan Stanley since the beginning of the year [1][4]. Group 1: Market Performance - Software stocks have experienced a significant downturn, with a 15% drop since the start of the year, following an 11% decline in 2025, marking the worst opening performance since 2022 [1]. - Current valuations for software stocks are at a record low, trading at 18 times expected earnings for the next 12 months, significantly below the average of over 55 times in the past decade [1]. Group 2: Impact of AI Developments - The panic in the market was triggered by Anthropic's release of "Claude Cowork," which showcased capabilities that alarmed investors about the future of software companies [5][6]. - Users reported completing complex projects in a week that would typically take a year, highlighting the disruptive potential of AI tools [2]. Group 3: Analyst Perspectives - Many buy-side institutions believe there is currently "no reason to hold" software stocks due to the uncertainty brought by AI, with no catalysts for valuation recovery in the short term [4][6]. - Analysts note that existing software companies have not demonstrated significant appeal in their AI products, with Salesforce and Adobe showing limited revenue impact from their AI initiatives [8]. Group 4: Comparative Sector Performance - The earnings growth forecast for software and services companies in the S&P 500 is expected to slow from approximately 19% in 2025 to 14% in 2026, contrasting with the semiconductor sector, which is projected to see profit growth of nearly 45% in 2025 and accelerate to 59% in 2026 [8][9]. - Major tech companies like Microsoft, Amazon, Alphabet, and Meta Platforms are expected to invest heavily in AI infrastructure, providing clearer visibility for revenue growth compared to software firms [8]. Group 5: Valuation Discrepancies - Despite low valuations, there is a divide in market sentiment regarding the future of software stocks, with some analysts optimistic about a rebound by 2026 due to stable customer spending and attractive valuations [10][11]. - Concerns remain about how software companies will compete against AI agents capable of completing tasks rapidly, complicating the assessment of appropriate valuation multiples [11].

Core Viewpoint - The release of Claude Code has reignited concerns about the disruption of the software industry by AI, leading to a significant decline in U.S. software stocks, marking one of the worst starts to the year in recent history [1][5]. Group 1: Market Performance - Since the beginning of the year, a basket of SaaS stocks tracked by Morgan Stanley has dropped by 15%, following an 11% decline in 2025, marking the worst opening performance since 2022 [1]. - Software stocks are currently trading at a record low valuation of 18 times expected earnings for the next 12 months, significantly below the past decade's average of over 55 times [1]. - Companies like ServiceNow Inc. have seen their stock prices fall to multi-year lows, while Intuit Inc. experienced a 16% drop, the largest weekly decline since 2022 [2]. Group 2: Investor Sentiment - Many buy-side institutions believe there is "no reason to hold" software stocks amid the disruptive uncertainty brought by AI, with no visible catalysts for valuation recovery in the short term [4][6]. - The release of the "Claude Cowork" service by Anthropic has intensified fears among investors regarding the future growth prospects of software companies [5][6]. Group 3: AI Integration Challenges - Most software manufacturers have not demonstrated significant appeal in their AI products, with Salesforce and Adobe struggling to show revenue impact from their AI initiatives [7]. - Existing software companies need to exhibit accelerated growth to drive stock price rebounds, which appears unlikely in the short term [7]. - In contrast, other tech sectors, particularly semiconductor companies, are expected to see substantial profit growth, with projections of nearly 45% profit growth in 2025 and 59% in 2026 [7][8]. Group 4: Valuation Discrepancies - Despite low valuations, there remains a divide in market sentiment regarding the future of software stocks, with some analysts optimistic about a rebound by 2026 due to stable customer spending and attractive valuations [8]. - Barclays and Goldman Sachs predict that rising AI adoption will expand the total addressable market for software companies, potentially benefiting them in the long run [8]. - Wealthspire's chief market strategist notes that while the sector is not yet a clear buy opportunity, it is approaching a more attractive point for investment [9].

Core Viewpoint - The software sector in the U.S. stock market is experiencing its worst start in years, with a 15% decline in software-as-a-service stocks tracked by Morgan Stanley, contrary to earlier expectations of a 11% drop by 2025 [1][4]. Group 1: Market Performance - The stock prices of major software companies like Intuit, Adobe, and Salesforce have seen significant declines, with Intuit dropping 16%, Adobe and Salesforce both falling over 11% [1]. - Despite the Nasdaq 100 index nearing historical highs, companies like ServiceNow have reached multi-year lows, indicating a disconnect between overall market performance and software stock valuations [5]. Group 2: AI Innovations and Concerns - Anthropic's launch of the Claude Cowork service has raised concerns about disruptive innovations in AI, which could further impact software manufacturers' growth prospects [4]. - The rapid development of AI tools has created unprecedented uncertainty regarding future growth, as highlighted by investment managers [4]. Group 3: Earnings and Valuation Trends - Earnings growth for software and service companies in the S&P 500 is expected to slow to 14% in 2026, down from an anticipated 19% in 2025, contrasting with more optimistic fundamentals in other tech sectors [6]. - The price-to-earnings ratio for Morgan Stanley's software company portfolio has dropped to 18 times expected earnings, a historical low compared to an average of over 55 times in the past decade [6][7]. Group 4: Future Outlook - Some analysts believe that the current low valuations of software stocks could lead to a rebound by 2026, driven by stable customer spending and the potential benefits of AI [7][8]. - There is a cautious optimism about the software sector's attractiveness, although it is not yet deemed a definitive buy opportunity [8].

Company Performance - Intuit's stock closed at $554.58, reflecting a decline of -2.12% from the previous day, underperforming the S&P 500 which gained 0.26% [1] - Over the past month, Intuit's shares have decreased by 14.25%, contrasting with the Computer and Technology sector's gain of 1.58% and the S&P 500's gain of 1.57% [1] Upcoming Earnings - Analysts anticipate Intuit will report earnings of $3.65 per share, indicating a year-over-year growth of 9.94% [2] - The expected quarterly revenue is $4.53 billion, representing a 14.23% increase from the same period last year [2] Annual Estimates - For the annual period, earnings are projected at $23.13 per share and revenue at $21.12 billion, reflecting increases of +14.79% and +12.16% respectively from the previous year [3] - Recent changes in analyst estimates for Intuit are crucial as they often indicate near-term business trends, with positive revisions suggesting a favorable business outlook [3] Valuation Metrics - Intuit's Forward P/E ratio stands at 24.5, which is higher than the industry average Forward P/E of 22.53 [6] - The company has a PEG ratio of 1.72, slightly below the average PEG ratio of 1.74 for Computer - Software stocks [6] Industry Context - The Computer - Software industry is part of the broader Computer and Technology sector, which holds a Zacks Industry Rank of 86, placing it in the top 36% of over 250 industries [7] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Core Insights - Intuit Inc. has launched its new TurboTax flagship store in New York City's SoHo, marking the nationwide rollout of nearly 600 Expert Office locations and 20 new TurboTax Stores, completing its expansion phase initiated last year [1][6] - The company aims to redefine tax filing by integrating AI-driven technology with human expertise, providing a seamless experience for consumers [2][3] Group 1: Store Experience and Technology Integration - The TurboTax stores combine digital filing with in-person expertise, creating a modern experience that departs from traditional tax offices [3] - Intuit's platform automates data entry for 90% of commonly used tax forms and prepares up to 80% of a simple filer's return before they begin [5] - The AI-driven system matches customers with local tax experts within seconds, enhancing the efficiency of the service [5] Group 2: Nationwide Expansion and Local Support - TurboTax is strategically opening stores in key markets, including New York, Southern California, Chicago, Dallas, and Phoenix, to provide local expert assistance [5][11] - The company has activated nearly 600 Expert offices nationwide, increasing its physical presence for face-to-face support [6] Group 3: Community Engagement and Events - To celebrate the flagship store opening, Intuit is hosting an exclusive event featuring notable guests and performances, highlighting its commitment to community engagement [7] - As part of its community investment, Intuit announced a $100,000 donation to NYC schools to support financial literacy and capability for students [8] Group 4: Design and Collaboration - TurboTax collaborated with Gensler for the design of its physical locations and BUCK for the interactive content design of the Forum [9]

Group 1 - Goldman Sachs analyst Gabriela Borges has initiated coverage of Intuit Inc. (NASDAQ:INTU) with a "Neutral" rating and a price target of $720, citing AI adoption as a positive factor for the software market [1] - Wells Fargo downgraded Intuit Inc. (NASDAQ:INTU) from "Overweight" to "Equal Weight" with a revised price target of $700, down from $840, indicating challenges in maintaining last year's tax performance [2] - TD Cowen analyst Jared Levine has initiated coverage with a "Buy" rating and a price target of $802, suggesting that the perceived risks related to AI for Intuit Inc. (NASDAQ:INTU) are overstated [3] Group 2 - The overall sentiment among analysts is mixed, with some seeing potential upside while others express caution regarding future performance [2][3] - The company offers a range of financial management, payments, compliance, and marketing products and services, indicating a diversified business model [3]

Company Overview - Defiance ETFs has launched two new single-stock leveraged funds: Defiance Daily Target 2X Long RKT ETF (BATS:RKTL) and Defiance Daily Target 2X Long LUNR ETF (BATS:LUNL) [1][2] - RKTL targets Rocket Companies, a financial technology firm known for its digital mortgage origination platform, offering a range of mortgage and personal finance services [3] - LUNL provides leveraged exposure to Intuitive Machines, a company focused on lunar access and services, including the design and operation of lunar landers [5] Market Dynamics - Rocket Companies' stock is sensitive to macroeconomic factors such as housing affordability, interest rates, and mortgage demand, leading to significant price volatility [4] - Intuitive Machines is positioned in the emerging lunar economy, attracting attention due to mission milestones and developments related to NASA, as well as broader investor interest in space and defense [5] Investment Trends - The launches of RKTL and LUNL reflect a growing demand among active traders for exchange-traded products that allow for short-term directional views on individual stocks without the use of margin accounts or derivatives [6] - Single-stock leveraged ETFs have gained popularity among sophisticated retail traders seeking transparent, exchange-listed vehicles tied to volatile equities [6][7] - Defiance continues to expand its suite of leveraged ETFs, catering to investor appetite for tactical tools in fast-moving sectors such as fintech, housing, and space exploration [7]