Recent announcements from OpenAI, creator of ChatGPT, will transform the way the financial industry works. Financial services providers, who thrive on helping customers improve their businesses, now have to deal with a new threat in the form of ChatGPT. The AI chatbot will soon help people and businesses get personalized answers related to tax, business, and cash flow management, among other things. This can easily be extended to finding suitable loans and mortgages, with AI helping to find the right ones for the right people, thus improving the acceptance rate.
In such a scenario, the best business plan for any financial company is full integration with ChatGPT, a feat that Intuit (INTU) has now achieved. The company will power applications within the ChatGPT interface to help people make better financial decisions, unlocking new areas of growth for both companies.
The deal between the two companies is worth more than $100 million and, at a very basic level, combines OpenAI’s LLM expertise with Intuit’s financial prowess. Some of Intuit’s most famous applications include TurboTax, QuickBooks, and Credit Karma, and by establishing strong privacy protocols, both companies will be able to provide these well-known solutions within the ChatGPT interface.
Headquartered in Mountain View, California, Intuit is a financial technology company best known for helping people manage their finances effectively. The company serves more than 100 million customers and offers them financial solutions that are now becoming even more popular thanks to AI integrations.
The company’s stock hasn’t had a great year so far, with returns of just 7.6% underperforming the S&P 500 Index ($SPX)’s 13.2% year-to-date (YTD) gains. After touching $800 per share in July of this year, shares have now fallen below $675.
You would think that a stock that has fallen 20% in about half a year would now be available at an attractive valuation. However, that is not the case with INTU. It still trades at a forward price-to-earnings ratio of 103.35 times, well above its 5-year average of 46.02 times. Its price-to-sales ratio of 3.19x is almost 27% above its 5-year average, despite being exactly the same as the IT sector median. It is only the price to cash flow of 24.89x where the stock is still trading below the sector median of 19.32x.
