Autodesk (ADSK): Reassessing Valuation After Strong Q3 Beat, Raised Guidance, and Cloud/AI Growth Outlook

Autodesk (ADSK) just delivered a stronger than expected third quarter, raised its full year earnings outlook, and paired that with solid commentary on cloud and AI adoption, giving investors fresh momentum to reassess the stock.

See our latest analysis for Autodesk.

The upbeat quarter and guidance land after a more muted patch, with the share price at $307.24 delivering a modest year to date share price return while the three year total shareholder return near 59% shows the longer term momentum remains firmly intact.

If Autodesk’s mix of design software, cloud, and AI has caught your eye, this is also a good moment to explore other high growth tech and AI names through high growth tech and AI stocks.

With earnings, guidance, and buybacks all moving in the right direction and the share price still below the average analyst target, is Autodesk quietly undervalued here, or is the market already baking in years of AI fueled growth?

Most Popular Narrative: 15.7% Undervalued

With Autodesk closing at $307.24 against a narrative fair value near $364.52, the gap hinges on strong growth and margin expansion assumptions.

Accelerating adoption of cloud-based platforms, such as Autodesk Construction Cloud and Fusion 360, and ongoing rollout of subscription and SaaS models are increasing recurring revenue, improving revenue visibility, and enhancing net margin stability due to higher operating leverage and sales efficiency improvements.

Read the complete narrative.

Want to see what kind of revenue runway and margin lift justify that higher fair value? The projections lean on powerful compounding and ambitious profitability targets. Curious how far earnings need to climb, and what multiple still supports upside at that level? Dive in to uncover the full playbook behind this valuation setup.

Result: Fair Value of $364.52 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this narrative could falter if lower cost or open source rivals chip away at pricing power, or if rapid AI advances allow nimbler competitors to leapfrog Autodesk.

Find out about the key risks to this Autodesk narrative.

Another Angle on Valuation

Looked at through a simple earnings lens, Autodesk screens as expensive. Its price to earnings ratio near 58.5 times is well above both the US Software industry at 31.7 times and a fair ratio closer to 39.2 times, which implies limited margin for error if growth stumbles.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Autodesk Narrative

If you see things differently or want to dig into the numbers yourself, you can craft a personalized Autodesk view in just minutes, Do it your way.

A great starting point for your Autodesk research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

Before you move on, put your research to work by scanning a few targeted stock lists that can sharpen your next moves and uncover opportunities others overlook.

• Target higher income potential by reviewing these 14 dividend stocks with yields > 3% that combine attractive yields with solid business fundamentals and more reliable cash generation.
• Capitalize on long term disruption by focusing on these 26 AI penny stocks that are embedding artificial intelligence into real world products and scalable business models.
• Position yourself ahead of the crowd by checking these 81 cryptocurrency and blockchain stocks riding the expansion of digital assets, blockchain infrastructure, and next generation payment systems.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com