Intuit's Earnings Disconnect: A Tale of Short-Term Sentiment vs. Long-Term AI-Driven Growth

The recent 6% drop in Intuit's (INTU) stock price following its Q2 2025 earnings report has sparked a critical debate: Is the market overreacting to near-term guidance concerns, or is it correctly pricing in structural risks to the company's growth trajectory? While Intuit delivered a stellar performance—exceeding revenue and EPS estimates by 2.1% and 3.4%, respectively—the stock's decline underscores a growing tension between short-term sentiment and long-term fundamentals. This article dissects the disconnect, evaluates RBC Capital Markets' $850 price target, and identifies strategic entry points for investors navigating this volatility.

The Earnings-Stock Disconnect: A Closer Look

Intuit's Q2 results were undeniably robust. Revenue surged 20.3% year-over-year to $3.83 billion, driven by a 47% revenue spike in TurboTax Live and strong adoption of AI agents across its platforms. Adjusted operating income hit $1.02 billion, with operating margins improving from -4.7% to 8.8%. These metrics reflect a company executing its AI-driven strategy with precision, leveraging automation and human-AI collaboration to redefine financial services.

Yet, the stock's post-earnings plunge was fueled by a 1.5% revenue guidance shortfall for Q3. Investors fixated on the 14–15% growth projection for Q1 FY2026, which fell below the 16.1% consensus, and the ongoing struggles of Mailchimp, which saw flat-to-declining revenue. The market's knee-jerk reaction, however, overlooks Intuit's broader narrative: a 15% year-over-year revenue increase in Q3 2025 to $7.8 billion, a 15% full-year guidance raise, and a 15.9% operating margin expansion.

RBC's $850 Price Target: Justified or Overambitious?

RBC Capital Markets' $850 price target, up from $760, hinges on Intuit's ability to monetize AI-driven innovations and scale its “expert platform” strategy. The firm cites TurboTax Live's 47% revenue growth, Credit Karma's 31% increase in Q3, and the 20% growth in QuickBooks Online's Online Ecosystem as proof of Intuit's AI monetization prowess. These segments collectively account for 60% of total revenue, with AI agents now serving millions of users.

However, RBC's optimism is tempered by execution risks. Mailchimp's underperformance—a “near-term drag” on the Global Business Solutions Group—and the slow transition of QuickBooks Desktop to a subscription model remain red flags. While management expects Mailchimp's turnaround by late FY2026, the current drag has already pressured short-term growth.

The $850 target assumes Intuit can navigate these challenges while maintaining its 15% revenue growth trajectory. At a current P/E ratio of 32x (vs. 35x for peers like ADP), Intuit's valuation appears reasonable, especially given its 80.26% gross margin and $6.2 billion in cash reserves. RBC's target implies a 29% upside from current levels, a premium that hinges on the successful integration of AI into monetization streams and the stabilization of Mailchimp.

Strategic Entry Points: Capitalizing on the Mispricing

The recent pullback to $651.96 presents a compelling entry point for long-term investors, particularly given Intuit's strong balance sheet and AI-driven moat. Key catalysts to monitor include:
1. Mailchimp Turnaround: A 5–10% improvement in user retention or product simplification could unlock $100–$150 million in incremental revenue.
2. AI Monetization Scaling: If AI agents contribute 10% of total revenue by FY2026 (up from 4% in Q3 2025), Intuit's valuation could expand to 35x earnings.
3. QuickBooks Desktop Transition: A smoother shift to subscription could add $200–$300 million in recurring revenue annually.

Investors should also consider dollar-cost averaging into the stock, given its volatility. A 10–15% allocation to Intuit could balance the risks of near-term execution challenges with the potential for 20%+ annualized returns over the next three years.

Conclusion: A Calculated Bet on AI's Future

Intuit's stock decline is a classic case of short-term sentiment overshadowing long-term fundamentals. While the market fixates on near-term guidance misses and Mailchimp's drag, the company's AI-driven monetization strategy—bolstered by TurboTax Live, Credit Karma, and QuickBooks Online—positions it to outperform in the next cycle. RBC's $850 target is ambitious but plausible if Intuit executes its turnaround plans. For investors with a 3–5 year horizon, the current price offers a disciplined entry point to capitalize on a fintech leader redefining its industry.

Investment Advice: Buy Intuit at $650–$660 with a stop-loss at $620. Rebalance the position if Mailchimp's Q3 FY2026 update shows user retention improvements or if AI agent adoption accelerates.