1 Artificial Intelligence (AI) Stock to Buy Before It Soars By 50%, According to Wall Street

Key Points

• Atlassian is helping businesses improve productivity with its innovative software products, and artificial intelligence (AI) is accelerating that mission.

• Atlassian's latest AI-powered tools are enticing businesses to upgrade their plans and increase their spending, resulting in faster revenue growth for the company.

• Atlassian stock is trading near the cheapest level since it went public, and Wall Street is bullish on its prospects from here.

• 10 stocks we like better than Atlassian ›

Atlassian (NASDAQ: TEAM) offers a portfolio of software products designed to help organizations boost productivity by streamlining workflows and encouraging collaboration between employees. Artificial intelligence (AI) is making these products significantly more effective, which is driving an acceleration in the company's revenue growth.

Atlassian stock is still trading below its 2021 record high, when a frenzy in the technology sector drove its valuation to an unsustainable level. But the majority of the analysts tracked by The Wall Street Journal think it might be time to buy the stock, and their average price target implies a whopping 50% potential upside over the next 12 to 18 months. Read on.

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Atlassian is all in when it comes to AI

Jira and Confluence are two of Atlassian's most popular products. Jira was originally designed to help software developers manage their projects, but it's now used in many non-technical workflows. Confluence, on the other hand, is like a digital town square where employees from all departments can come together to share ideas, or even host important documents containing corporate policies and procedures.

Last year, Atlassian launched a new AI platform called Rovo, which integrates with Jira, Confluence, and many popular third-party apps organizations might use, like Microsoft Office 365 and Alphabet's Google Drive. Rovo includes many innovative tools, including an AI-powered search function that centralizes information from across the entire organization, so employees can find it with a simple prompt no matter where it is stored.

Then there is the Rovo Agents feature, which allows organizations to create custom AI assistants to automate specific tasks across the applications employees use every day. Agents can be trained to do many different things, like summarizing important meetings, generating marketing ideas, or even translating content into different languages, which is great for multinational corporations.

Atlassian's revenue growth accelerated during its recent quarter

Atlassian generated a record $1.38 billion in revenue during the fiscal 2025 fourth quarter (ended June 30), which was up 22% compared to the same quarter of fiscal 2024. That growth rate marked an acceleration from the fiscal 2025 third quarter three months earlier, when revenue increased by 14%. In fact, it was the fastest growth rate in an entire year.

However, the real growth story lies beneath the surface of the headline number, because Atlassian said its annual recurring revenue attributable to its premium and enterprise plans soared by a whopping 40% year over year. These are the company's most expensive subscription tiers, which include all of its AI products, so businesses appear to be spending more money to access them.

But developing new AI products isn't cheap. Atlassian's fourth-quarter operating costs grew by 20% year over year to $1.17 billion, with research and development making up the lion's share of that spending. Those soaring costs resulted in a $23.9 million net loss during Q4, on a generally accepted accounting principles (GAAP) basis.

The picture looked much better on an adjusted (non-GAAP) basis, which excludes one-off and non-cash expenses like stock-based compensation. By that metric, Atlassian was profitable to the tune of $259.1 million in Q4, which was an improvement of 51% from the year-ago period.

But non-GAAP results should always be taken with a grain of salt. Atlassian issued $350.5 million worth of stock-based compensation to its employees during Q4 alone, and although that might be better than handing over $350.5 million in cash, existing shareholders are diluted every time new shares are created. Thus, this is a hidden cost to investors.

Wall Street is bullish on Atlassian stock

The Wall Street Journal tracks 34 analysts who cover Atlassian stock, and 21 of them have given it a buy rating. Seven others are in the overweight (bullish) camp, while the remaining six recommend holding. None of the analysts recommend selling.

They have an average price target of $246.19, which implies the stock could soar by 50% over the next 12 to 18 months. However, the Street-high target of $320 points to an even juicer potential upside of 94%.

When Atlassian stock peaked in 2021, its price-to-sales (P/S) ratio was hovering at around 50, which was completely unsustainable. But it's now at a more reasonable level of 8.2, thanks to the company's consistent revenue growth over the last few years, combined with a decline in its stock price. In fact, 8.2 is near the cheapest level since Atlassian went public in 2015.

TEAM PS Ratio data by YCharts

Atlassian believes it can grow its annual revenue to $10 billion by fiscal 2029, which would be almost double the $5.2 billion it brought in during fiscal 2025. But that would still be a mere fraction of the company's addressable market, which management values at around $67 billion today.

As a result, I think Wall Street's bullish consensus is justified, and Atlassian stock likely has plenty of room for upside from here.

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Annie Dean, a Vice President at Atlassian, is a member of The Motley Fool's board of directors. Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Atlassian, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.