Artificial intelligence (AI) could be one of the most transformative technologies in history. Goldman Sachs believes it could add $7 trillion to the global economy over the next decade, and that’s conservative compared to other estimates. Ark Investment Management, for example, puts that number at $200 trillion by 2030.
Nearly every technology company is trying to capture a slice of that enormous pie, but some are better positioned than others. Atlassian (NASDAQ: TEAM) has a 20-year track record of helping businesses boost productivity through its collaborative software platforms like Jira and Confluence. Now, the company is using that experience to add AI into the mix. Here’s why Atlassian could be a great AI stock to buy this year (and beyond), especially because it currently trades at a 54% discount to its all-time high.
Introducing Atlassian Intelligence
Jira and Confluence are Atlassian’s flagship products. Jira is a collaboration platform designed to help software developers build workflows, track bugs, and ship new updates. However, it’s increasingly being used by non-technical staff to manage other types of projects. Confluence, on the other hand, was designed to be an organization-wide digital collaboration platform where employees can brainstorm ideas and strategies. They can even create dedicated workspaces for specific departments, so content is neatly segmented.
Atlassian’s Sacrifice for Growth
Like most technology companies, Atlassian typically invests heavily in growing its customer base and its revenue, even at the expense of generating a profit. But given the challenging economy, with interest rates at the highest level in two decades, the cost of capital skyrocketed, which is forcing tech companies to be more prudent. In the fiscal 2024 second quarter, Atlassian generated more than $1 billion in revenue for the first time in its history, 21.5% growth compared to the year-ago period. However, it carefully managed its costs and only increased its operating expenses by 12.1%, which allowed more money to flow to the bottom line.
Why the Stock is a Buy Now
Atlassian stock is trading 54% below its all-time high, which was set during the tech frenzy in 2021. Investors assigned a somewhat unrealistic valuation to the company back then, but the subsequent dip has created an opportunity for those willing to buy in now and hold for the long term. The company will likely continue to manage costs to reach profitability, but the inclusion of AI will make tools like Jira and Confluence more valuable for businesses, which could drive more revenue growth. Given Atlassian’s large customer base and its long-term experience in developing productivity software, it might be one of the best-positioned companies to capitalize on the AI revolution.
Should you invest $1,000 in Atlassian right now? Before you buy stock in Atlassian, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Atlassian wasn’t one of them.
*Stock Advisor returns as of February 20, 2024 Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atlassian, Goldman Sachs Group, 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. 1 Artificial Intelligence (AI) Growth Stock Down 54% to Buy Hand Over Fist in 2024 was originally published by The Motley Fool
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