10 Best Cloud Stocks To Buy According to Short Sellers

7. Atlassian Corporation (NASDAQ:TEAM)

Number of Hedge Fund Investors  in Q2 2024: 47

Short Interest as % of  Shares Outstanding: 0.91%

Atlassian Corporation (NASDAQ:TEAM) is a large and diversified cloud computing company. Its products include the Jira project management software, Bitbucket, which is a coding collaboration tool, and others that range from administration to communication. The premium placed on cloud computing firms to deliver accelerated growth has also meant that Atlassian Corporation (NASDAQ:TEAM)’s shares have struggled in 2024. The stock is down 26% year to date, with key reasons behind the drop being investors’ concerns of a longer than expected customer migration to Atlassian Corporation (NASDAQ:TEAM)’s cloud platform from the sunset server platform, and its inability to control costs as evidenced by an expected non adjusted EBITDA margin of -6% for fiscal year 2025. Given that growth and cost control are key tenets of cloud valuation, Atlassian Corporation (NASDAQ:TEAM)’s share performance is unsurprising.

Artisan Partners mentioned Atlassian Corporation (NASDAQ:TEAM) in its Q1 2024 investor letter. Here is what the fund said:

“Among our top detractors were Atlassian, ON Semiconductor and Exact Sciences. Atlassian’s earnings results met expectations for cloud revenue growth. However, this was insufficient for investors to support the stock’s momentum after strong recent performance. While parts of its cloud business, such as enterprise, are exceeding expectations, there are signs of weakness among small- and medium- sized companies, where pressures persist in paid seat expansions. We trimmed the position due to valuation concerns; however, we remain bullish in the longer term and are building conviction around its ability to leverage generative AI to drive accelerated cloud revenue growth.”