These 3 Stocks Have Fallen as Much as 50% Because of AI. By Christmas, We’ll Know Whether the Market Overreacted
Intuit, Adobe, and Workday continue to earn billions and beat estimates, yet the market is selling them as future victims of AI agents. Within three weeks, each will report one number that will determine whether this is a bargain or a breaking point.
Key points
Three highly profitable software companies have fallen by as much as half, despite continuing to beat analysts’ estimates.
Intuit’s CEO himself admitted why its highest-value customers are leaving TurboTax.
Adobe reports AI revenue growth of more than 150%, yet Citi has given it a rare Sell rating.
Workday raised its outlook and margins, announced a $4 billion buyback, and its stock still fell after the results.
Within three weeks, each will report one number that will distinguish a bargain from a breakdown in its business model.
One fear, three different stories
Software stocks have had a year in which they kept growing and earning, yet still fell. The market fears that AI agents will soon be able to handle tax returns, graphic design, or HR administration on their own, leaving companies that sell these services by subscription with less pricing power. Investors aren’t waiting for proof. They’re selling in anticipation.
Three big names have been given the same label: Intuit $INTU , Adobe $ADBE and Workday $WDAY . All three are highly profitable, beat estimates in the latest quarter, and will face the market again within three weeks.
Company | Price on Nov. 6 | 52-week high | Down from high | P/E | Earnings |
|---|---|---|---|---|---|
Intuit | 341,50 USD | 682,27 USD | -49,9 % | 20,8 | Nov. 19 |
Adobe | 239,30 USD | 362,71 USD | -34,0 % | 13,2 | Dec. 9 |
Workday | 192,90 USD | 236,80 USD | -18,5 % | 38,6 | Nov. 24 |
But behind the same label are three different stories. For one, the concern is already reflected in the numbers; for another, it’s contradicted by AI revenue growing 150%; and in the third case, the market doesn’t believe even numbers that beat management’s promises.
The steepest drop belongs to a company that admitted customers are leaving because of price
Intuit is trading at 341,50 USD and has lost half its value since last year’s high. Yet the latest quarter, reported on Aug. 25, looked excellent: revenue of 4,4 billion USD (+14 %) and adjusted earnings per share of 4,03 USD, up 47 % from a year earlier. What sent the stock down was the outlook—and one admission.
For fiscal 2027, the company expects revenue of 23,28 to 23,51 billion USD, growth of just 9 to 10 % after 14 % the year before. And CEO Sasan Goodarzi openly said that TurboTax, the company’s flagship product, lost high-value customers to cheaper competitors this year. Intuit is therefore deliberately lowering the price of its entry-level version to win them back. This is exactly the mechanism the market fears from AI: pressure on the price of work that used to be expensive.
The company still generates 8,6 billion USD in free cash flow annually, which at today’s market capitalization implies a 9,1 % yield, and it raised its dividend by 15 %. A forward P/E of 14,6 versus a five-year average of 52 is the kind of valuation given to mature industrial companies, not a software leader with gross margins above 80 %.
The quarter reported on Nov. 19 falls outside tax season (estimates: earnings per share of 2,46 USD, revenue of 4,3 billion USD), so it won’t settle much on its own. The commentary will matter: whether the lower price is actually bringing new TurboTax users in, or just reducing revenue from the same number of customers.
“Consumers have more lower-cost alternatives, and this year we lost high-value DIY customers to lower-cost providers. Price is now the number one reason customers leave TurboTax.”
Sasan Goodarzi, CEO of Intuit
The cheapest of the three is growing fastest with AI—and has just received a Sell rating
Adobe is the sector’s paradox. Its stock is trading at 239,30 USD, its P/E is 13,2, and its forward P/E is 9,1 versus a five-year average of 41,6. That’s how automakers in a recession are valued, not a company with an operating margin of 35,7 % and 10,9 billion USD in annual free cash flow (an 11,4 % yield).
So far, AI is helping the company. In its third fiscal quarter, Adobe reported record revenue of 6,76 billion USD (+13 %), annual recurring revenue of 27,5 billion USD, and AI-first ARR growth of more than 150 %. It surpassed one billion monthly users and raised its full-year outlook. That was its fifth consecutive quarter of beating estimates. And the stock still fell after the results.
The reason lies in the details: Adobe is deliberately directing new users to its free version to get them invested in the product, so new ARR fell year over year and remaining performance obligations grew by just 8 %. The market sees the start of erosion; management sees an investment. On top of that, Anil Chakravarthy takes over the company on Dec. 1, and the CFO position is only temporarily filled. On Nov. 5, Citi downgraded the stock to a rare “Sell” rating with a 207 USD price target and expects a weak fiscal 2027 outlook.
That outlook comes on Dec. 9. The fourth-quarter target is revenue of 6,80 to 6,85 billion USD and full-year ARR growth of 10,2 %. The market will focus mainly on what the new CEO promises for next year.
“Adobe delivered record Q3 results, reflecting the strength of our AI innovations, our expanding customer reach, and our leadership in creativity, productivity, and customer experience.”
Shantanu Narayen, Chairman and CEO of Adobe
It beat estimates, raised its outlook, and the market still sold
Workday is the most expensive of the three, with a P/E of 38,6 (forward 16,4), and has lost the least from its high: 18,5 %. Still, 2026 was brutal for the company: in April, its stock fell as low as 110,36 USD and has since climbed 75 % to today’s 192,90 USD.
The latest quarter, reported on Aug. 27: revenue of 2,649 billion USD (+12,8 %), subscription revenue of 2,471 billion USD (+13,9 %), adjusted earnings per share of 2,75 USD versus 2,21 a year earlier, a raised full-year outlook and margins, and a new 4 billion USD share buyback. Yet the stock fell after the market close because the third-quarter subscription outlook (2,515 billion USD, +12 %) was below estimates.
CEO Aneel Bhusri says AI already accounts for more than a quarter of new contracts, and over 5 500 customers are using agents. The core concern lies elsewhere: Workday charges subscriptions based on the number of its clients’ employees. If AI agents replace some people in HR and finance departments, the base from which the company collects revenue will shrink. That isn’t visible in the numbers yet.
On Nov. 24, the 12-month subscription backlog (last reported at 9,03 billion USD, +14,2 %) and the fourth-quarter outlook will be decisive. As long as growth stays above 12 %, the numbers don’t support the thesis that the model is breaking down.
“We had a strong Q2, AI accounted for more than 25 % of our new annual contract value, and more than 5 500 customers are already using at least one of our own agents. ... With Workday’s deterministic guardrails, customers can entrust our agents with work that matters, and you can see that in the numbers.”
Aneel Bhusri, Co-founder, CEO and Chairman of Workday
Three dates, three numbers that will show the difference
A cheap stock and a crumbling business model look the same on a chart. The difference comes down to one number for each of the three companies, due within three weeks:
Intuit, Nov. 19: the number of new TurboTax customers relative to price. If volume rises while price falls, that’s a discount to win market share. If both fall, that’s erosion.
Workday, Nov. 24: subscription backlog and the fourth-quarter outlook. Above 12 %, the market keeps the stock at a discount; below 12 %, the cycle of lowering forecasts continues.
Adobe, Dec. 9: the new CEO’s first outlook for fiscal 2027. Double-digit ARR growth alongside a growing free-user base would mean freemium is working. A single-digit outlook would prove Citi right.
If the numbers confirm the thesis, they hold and multiples return to the sector average (P/E 31,5). If the model breaks, the outlook will come in below consensus—and this year has made one thing clear: the market sells regardless of profitability.
Analysts are leaning toward the first scenario: consensus price targets are 379,68 USD for Intuit, 267,47 USD for Adobe, and 203,19 USD for Workday—all above today’s prices. Bulios’s fair value, however, is 281 USD for Intuit and 318 USD for Adobe. So the stock that has fallen the most may not be the cheapest.
