In this piece, we will take a look at the 10 best enterprise software stocks to buy right now.
Enterprise software is integral to the functioning of modern businesses, offering a range of applications designed to streamline and optimize various essential activities. These include enterprise resource planning (ERP), customer relationship management (CRM), business intelligence (BI), supply chain management (SCM), and more. The market is structured around eight core segments based on the functionality of the software: Business Intelligence Software, Content Management Software, Customer Relationship Management Software, eCommerce Software, Enterprise Performance Management Software, Enterprise Resource Planning Software, Supply Chain Management Software, and other specialized enterprise software solutions. The market’s evolution is driven by several key factors. Businesses worldwide are increasingly adopting digital transformation strategies, which are fueling demand for flexible, scalable, and user-friendly software solutions. Cloud-based software, or Software as a Service (SaaS), has become particularly popular due to its adaptability and ease of integration with other systems. Companies are also seeking software that can help them reduce costs, streamline operations, and improve their overall performance.
Geographically, the United States leads the enterprise software market, driven by the high demand for cloud-based solutions and the rapid adoption of artificial intelligence (AI) and machine learning technologies. In Europe, the market is propelled by the need for digital transformation and compliance with regulations such as the General Data Protection Regulation (GDPR). The Asia-Pacific region is experiencing growth due to the increasing adoption of cloud-based solutions and the rise of small and medium-sized enterprises (SMEs). In China, the market is dominated by domestic companies due to government restrictions on foreign firms, while in India, the market benefits from the proliferation of mobile devices and startups. Latin America’s market is driven by the need for regulatory compliance and efficient business management solutions.
The enterprise software market is influenced by various macroeconomic factors, including GDP growth, technological innovation, and government regulations. As businesses across the globe strive to stay competitive in an increasingly digital world, the demand for advanced software solutions continues to rise. The growing adoption of cloud-based platforms is particularly significant, as companies seek to enhance their flexibility while reducing operational costs. Additionally, government regulations play a crucial role in shaping the market, affecting the adoption of certain software types and the ability of foreign companies to operate in specific regions.
According to Statista, the Enterprise Software market is poised for remarkable growth in 2024, with revenue expected to reach a staggering $295.20 billion. At the forefront of this expansive market is Customer Relationship Management (CRM) Software, which alone is projected to generate $89.30 billion in revenue. The overall market is anticipated to continue its upward trajectory with a compound annual growth rate (CAGR) of 6.35% from 2024 to 2029, resulting in a projected market volume of $401.60 billion by the end of the forecast period. A key metric within the industry, the average spend per employee, is expected to reach $82.91 in 2024, underscoring the growing importance of enterprise software in driving business efficiency and productivity. The United States stands as the dominant player in the global market, with projected revenue of $150.50 billion in 2024, reflecting its leadership in innovation and technology adoption.
Enterprise Resource Planning (ERP) is increasingly recognized as a significant growth area within the broader Enterprise Software and Software-as-a-Service (SaaS) markets, particularly as more corporations begin upgrading their finance applications. This critical functional area has been somewhat neglected in recent years, but it is now gaining attention as businesses seek to enhance their financial management capabilities. Unlike other software segments where the public cloud has become the dominant delivery model, ERP within the enterprise software landscape is expected to see a more balanced adoption of both public and private cloud solutions. This hybrid approach allows enterprises to leverage the flexibility and scalability of the public cloud while maintaining the security and control offered by private cloud environments, which is crucial for managing sensitive financial data and complex business processes. The public-cloud ERP market, a key segment of the enterprise software industry, includes applications for finance, planning, procurement, and asset management, and is on track for substantial growth. According to IDC data, this market is projected to expand from $36 billion in 2021 to an impressive $73 billion by 2026, representing a strong annual growth rate of 15%. Despite its potential, ERP has been slower to migrate to the cloud compared to other types of enterprise software, with approximately 48% of ERP systems still operating on-premise. However, as large corporations increasingly seek deeper insights into their operations and the ability to scale efficiently, the push toward cloud-based ERP solutions is accelerating. This shift is driven by the need for more integrated and flexible systems that can adapt to the evolving demands of modern businesses.
Given the robust growth prospects and the vital role enterprise software plays in today’s business landscape, this article will explore the 10 best enterprise software stocks to buy now. These companies are well-positioned to capitalize on the ongoing digital transformation and the increasing reliance on sophisticated software solutions by businesses worldwide. Investing in these stocks offers an opportunity to participate in the growth of a dynamic and essential industry.
Our Methodology
We used software ETFs plus online rankings to compile an initial list of the best enterprise software stocks to buy now. We narrowed our list to the 10 stocks that analysts see the most upside to. The list is sorted in ascending order of analysts’ average upside potential, as of August 15. Note: We only included companies whose primary business is in the enterprise software industry.
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10. CyberArk Software Ltd. (NASDAQ:CYBR)
Average Analyst Share Price Target Upside: 5.22%
Average Analyst Share Price Target: $290.83
At number ten on our list of ten best enterprise software stocks to buy right now stands CyberArk Software Ltd. (NASDAQ:CYBR). CyberArk Software Ltd. (NASDAQ:CYBR) has an average analyst share price target of $290.83, indicating an upside potential of 5.22%. Analysts consider CyberArk Software Ltd. (NASDAQ:CYBR) a strong performer, driven by its expanding cloud business and the increasing importance of Privileged Access Management (PAM). Despite tough market conditions, CyberArk Software Ltd. (NASDAQ:CYBR) remains resilient, benefiting from the rapid growth in machine identities. Although the stock isn’t cheap, analysts view the company’s robust performance and future growth potential as attractive. The recent acquisition of Venafi is seen as a strategic move that strengthens its position in machine identity management, adding significant revenue and expanding its market. While competition from Okta and others is intensifying, CyberArk Software Ltd. (NASDAQ:CYBR) focus on privileged access controls and identity security is considered a key differentiator.
For its latest earnings report announced on August 8, CyberArk Software Ltd. (NASDAQ:CYBR) delivered strong results. The company reported normalized EPS of $0.54, beating estimates by $0.14. CyberArk Software Ltd. (NASDAQ:CYBR) revenue also reached $224.71 million, surpassing expectations with a $5.10 million surprise. CyberArk Software Ltd. (NASDAQ:CYBR) has delivered an impressive year-to-date price return of 27.83%, significantly outperforming the S&P 500’s 16.45% gain. This strong performance underscores the market’s confidence in CyberArk’s growth potential and strategic positioning in the cybersecurity sector.
Next Century Growth Small Cap Strategy stated the following regarding CyberArk Software Ltd. (NASDAQ:CYBR) in its first quarter 2024 investor letter:
“CyberArk Software Ltd. (NASDAQ:CYBR) is a leading identity security platform which helps companies protect against cybersecurity attacks. CYBR specializes in privileged access management (PAM) and has a full suite of products for identity security. As cyber attack sophistication increases, companies of all sizes need to upgrade from legacy solutions such as SSO (single sign on) and MFA (multi-factor authentication), which is leading to a strong demand environment for CYBR’s solutions. Given this end market backdrop, the company is growing revenue >20% and is delivering solid margin expansion.”
09. Intuit Inc. (NASDAQ:INTU)
Average Analyst Share Price Target Upside: 6.08%
Average Analyst Share Price Target: $691.77
Intuit Inc. (NASDAQ:INTU) takes the number ninth spot on our list of ten best enterprise software stocks to buy right now. Intuit Inc. (NASDAQ: INTU) has an average share price target upside of 6.08%, with a target of $691.77. Intuit Inc. (NASDAQ:INTU) is trading at levels that many analysts consider unsustainable after a 30% gain over the past year. Current valuations suggest that significant margin improvements are already priced in, even as key macroeconomic tailwinds begin to fade. Analysts believe that with revenue growth normalizing, Intuit Inc. (NASDAQ:INTU) may be forced to pursue riskier M&A strategies to sustain its momentum. While some analysts think the stock could benefit from favorable macroeconomic conditions in the short term, the long-term outlook is viewed with caution as the current premium pricing may not be justified.
The forward dividend yield for the company stands at 0.55%, with an annual payout of $3.60. The payout ratio is 20.93%, and the dividend has experienced a robust 5-year growth rate of 13.88%. Notably, the company has consistently increased its dividend for 12 years. On August 14 Morgan Stanley downgraded Intuit Inc. (NASDAQ:INTU) from “Overweight” to “Equal-weight” and cut the price target from $750 to $685. This reflects concerns over Intuit Inc. (NASDAQ:INTU) aggressive pricing strategy impacting TurboTax’s market share and high expectations for QuickBooks’ growth amid recent price hikes. Despite past strong performance, recent acquisitions and market challenges lead to a more conservative outlook.
Baron FinTech Fund stated the following regarding Intuit Inc. (NASDAQ:INTU) in its Q2 2024 investor letter:
“GenAI has captured the market’s imagination, but it’s still very early in the user adoption of this new technology, and the financial payoff from investments into GenAI models and infrastructure is still unknown. We are focused on investing in strong businesses that will be improved by AI, even if this improvement takes time to materialize. Intuit Inc. (NASDAQ:INTU) has been rolling out Intuit Assist, a GenAI powered digital assistant, across its product lines to help Credit Karma users select new credit cards, QuickBooks customers forecast cash flow, Mailchimp customers create targeted email marketing campaigns, and TurboTax customers understand changes in their tax returns from the prior year. We consider these GenAI advancements to be evolutionary rather than revolutionary, but we continue to closely monitor the impact of new technologies on the fintech industry.”
08. Oracle Corporation (NYSE:ORCL)
Average Analyst Share Price Target Upside: 6.50%
Average Analyst Share Price Target: $145.83
At number 8 stands Oracle Corporation (NYSE:ORCL) which has an average share price target of $145.83, suggesting a potential upside of 6.50%. Analysts believe Oracle Corporation (NYSE:ORCL) is set for further gains, despite its 30% rise this year. With AI deals driving growth, including a notable agreement with OpenAI, Oracle is expected to accelerate its revenue in FY25. Currently trading at a 23x forward P/E ratio, below many peers, Oracle Corporation (NYSE:ORCL) continued expansion in cloud services and AI positions it well for double-digit revenue growth, making it a promising investment with its attractive valuation. The dividend summary for Oracle Corporation (NYSE:ORCL) includes a forward yield of 1.17%, an annual payout of $1.60, and a payout ratio of 28.73%. The dividend has grown at an annual rate of 13.22% over the past five years and has been consistently increased for nine years.
In a recent developemnt, on August 13, Oracle Corporation (NYSE:ORCL) unveiled new user experience enhancements for Oracle Fusion Cloud SCM. The updates, powered by the Oracle Redwood Design System, aim to improve productivity and efficiency in global supply chains. Chris Leone, Oracle’s EVP of applications development, highlighted that these changes will enhance operational speed, reduce costs, and boost accuracy. Key features include advanced smart search, customizable business rules, and Oracle Guided Journeys. New enhancements include automated pricing rules, field parts inventory management, improved product management views, and streamlined mass component replacements.
ClearBridge Value Equity Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q2 2024 investor letter:
“Likewise, cloud computing software company Oracle Corporation (NYSE:ORCL) reported strong backlog growth and signed a new client in OpenAI, which intends to use Oracle’s cloud infrastructure to train its AI models. The company also received tailwinds from its announced partnership with Google’s Cloud Platform (GCP) to build Oracle’s cloud infrastructure directly into GCP, which we believe will help accelerate the growth of Oracle’s cloud database services.”
07. Adobe Inc. (NASDAQ:ADBE)
Average Analyst Share Price Target Upside: 8.52%
Average Analyst Share Price Target: $601.38
Adobe Inc. (NASDAQ:ADBE) has re-emerged as a beneficiary of generative AI, despite initial concerns. The company posted a strong “beat and raise” quarter, with 10% YoY revenue growth, driven by the success of its AI products like Firefly. Adobe Inc. (NASDAQ:ADBE) robust financials, including $8.07 billion in cash, support its growth outlook. With management guiding for continued revenue increases, analysts consider the stock attractive, trading at a reasonable valuation given its strong growth and profitability. Adobe Inc. (NASDAQ:ADBE) has significant growth potential, with an average share price target of $601.38, reflecting an upside of 8.52%. This optimistic outlook underscores confidence in Adobe Inc. (NASDAQ:ADBE) ability to continue its strong performance, driven by its innovative product offerings and robust financial health.
Polen Global Growth Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q2 2024 investor letter:
“With Adobe Inc. (NASDAQ:ADBE), in some ways, we see it as a microcosm of the market’s “shoot first, ask questions later” approach to categorizing AI winners and losers. In the early part of last year, Adobe came under pressure with a perception that generative AI (GenAI) would represent a material headwind to their suite of creative offerings. In short order, the company introduced its GenAI offering, Firefly, which shifted the narrative to Adobe as a beneficiary with a real opportunity to monetize GenAI in the near term. Earlier this year, that narrative was again challenged as the company reported a slight slowdown in revenue growth. Results in the most recent quarter were robust as the company raised its full-year forecast across a number of key metrics and showcased better-than-expected results.”
06. Salesforce, Inc. (NYSE:CRM)
Average Analyst Share Price Target Upside: 11.38%
Average Analyst Share Price Target: $292.79
Salesforce, Inc. (NYSE:CRM), a leading player in the cloud computing industry, stands at number six on our list of ten best enterprise software stocks to buy right now. On August 16, BofA Securities raised its price target for Salesforce, Inc. (NYSE:CRM), from $288.00 to $316.00, while maintaining a Buy rating. Analysts believe the company’s strong free cash flow (FCF) growth justifies the optimism. Although revenue growth is projected to slow from 11% to 9% in fiscal 2025, Salesforce, Inc. (NYSE:CRM) is still expected to post a 25% FCF increase, driven by 22.5% growth in operating cash flow. Analysts also see potential productivity gains in sales and marketing boosting margins further. The new price target reflects a 22x multiple on estimated fiscal 2025 FCF, up from 16x previously. Salesforce, Inc. (NYSE:CRM) leadership in artificial intelligence (AI) is anticipated to provide a revenue boost. The company’s Data Cloud platform, integral to its AI strategy, continues to see strong adoption, with over 1,000 new customers in Q1. Salesforce, Inc. (NYSE:CRM) robust financials, including a 43% year-over-year increase in free cash flow to $6.1 billion, further solidify its position as a compelling long-term investment. The consensus among analysts remains optimistic, with a median price target of $292.79, suggesting a potential upside of over 11%.
Polen Focus Growth Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q2 2024 investor letter:
“Salesforce, Inc. (NYSE:CRM) declined nearly 20% due to a slowdown in revenue and bookings growth, part of a wider trend we’ve observed across enterprise software as companies defer spending on large projects given the uncertain macroeconomic environment. As mentioned, there has been an emerging narrative about prioritized spending on AI, cloud, and security over enterprise software spending that could eventually impair seat-based software over the longer term. Though there may be some near-term shifts in dollars toward GenAI, we believe the market for mission-critical enterprise software will remain robust well into the future. We will monitor the position closely, but we continue to believe that Salesforce is well-placed with its mission-critical software and high customer retention rates to weather these headwinds, lean on pricing power, and effectively monetize generative AI in its product suite.”
05. Twilio Inc. (NYSE:TWLO)
Average Analyst Share Price Target Upside: 15.24%
Average Analyst Share Price Target: $69.95
Twilio Inc. (NYSE:TWLO) has underperformed the broader market in the past year due to slowing growth and weak customer spending. However, the company is gaining momentum thanks to its integration of AI into its cloud communications services, which could help it capture more business. Twilio’s AI tools, like Agent Copilot, are designed to improve customer service efficiency, and early tests show promising results. Despite its challenges, Twilio Inc. (NYSE:TWLO) revenue is expected to grow, with analysts predicting a nearly 20% annual increase in earnings over the next five years. Currently trading at a discount, Twilio Inc. (NYSE:TWLO) could offer significant upside as AI adoption expands. Twilio Inc. (NYSE: TWLO) has an average analyst share price target of $69.95, which implies a potential upside of 15.24% from its current level.
For the quarter announced on August 1, Twilio Inc. (NYSE:TWLO) delivered robust results that exceeded market expectations. The company reported a normalized EPS of $0.87, beating estimates by $0.17. Revenue also outperformed forecasts, coming in at $1.08 billion, surpassing projections by $25.82 million. These strong results highlight Twilio Inc. (NYSE:TWLO) resilience and growing momentum despite recent challenges. On August 2, Piper Sandler analyst James Fish assigned a Buy rating to Twilio Inc. (NYSE:TWLO) with a price target of $83.00.
Aristotle Atlantic Focus Growth Strategy made the following comment about Twilio Inc. (NYSE:TWLO) in its Q4 2022 investor letter:
“We sold Twilio Inc. (NYSE:TWLO) and thereby reduced our subsector weight in software. The company reported a decent third quarter, but disappointed on fourth quarter 2022, full year 2023, and long-term guidance. The company is seeing macroeconomic headwinds and a slowdown spreading from technology, social media and cryptocurrency to retail and e-commerce. The other negative disclosure and a driver of this gross margin “miss” was that Twilio’s software sales are not accelerating at the rate that we expected. We are disappointed with this lower topline and low operating margin improvement guidance. The business transformation is taking longer than expected, and there is the heightened possibility that the new software growth could be stifled by more formidable competition as Twilio has made too many missteps.”
04. Microsoft Corporation (NASDAQ:MSFT)
Average Analyst Share Price Target Upside: 17.50%
Average Analyst Share Price Target: $494.72
Microsoft Corporation (NASDAQ:MSFT) has an average analyst price target of $494.72, reflecting a potential upside of 17.50%. Microsoft Corporation (NASDAQ:MSFT) expanding dividend makes it a compelling buy. Over the past decade, the dividend has nearly tripled, with annual hikes averaging about 10%. Despite spending over $21 billion on dividends annually, Microsoft Corporation (NASDAQ:MSFT) low payout ratio of 25% keeps this cost manageable. Although the company has cut back on stock buybacks to increase spending on growth and AI, it continues to repurchase shares enough to prevent dilution. With a P/E ratio of 33.8, analysts consider Microsoft Corporation (NASDAQ:MSFT) as reasonably priced compared to its large-cap peers. In its latest earnings announcement on July 30, Microsoft Corporation (NASDAQ:MSFT) reported a normalized EPS of $2.95, exceeding expectations by $0.01. The company’s revenue reached $64.73 billion, beating estimates by $287.80 million.
Despite concerns over margin impacts from generative AI investments, the company’s growth in AI-driven areas like Azure and GitHub remains strong. Microsoft Corporation (NASDAQ:MSFT) capex has surged 78%, indicating robust future growth potential. The company’s focus on AI and cloud infrastructure positions it well for long-term gains, making it a compelling investment despite short-term volatility.
Polen Focus Growth Strategy stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“The top absolute contributors were Alphabet, Microsoft Corporation (NASDAQ:MSFT), and Amazon. Microsoft was another top absolute contributor in the quarter, speaking to a growing appreciation for all the ways the company has an opportunity to monetize GenAI, be it in its Office suite or Azure cloud business. In the latter case, it contributed 7% to Azure’s revenue growth in the most recent quarter. We believe Microsoft remains a highly advantaged business with many secular tailwinds driving durable growth for the foreseeable future, even at its immense scale.”
03. Workday, Inc. (NASDAQ:WDAY)
Average Analyst Share Price Target Upside: 20.58%
Average Analyst Share Price Target: $279.22
Workday, Inc. (NASDAQ:WDAY) offers a cloud-based suite for HR and financial management aimed at large enterprises. Workday, Inc. (NASDAQ:WDAY) has an average analyst price target of $279.22, suggesting a potential upside of 20.58%. The company is investing heavily in AI and machine learning to strengthen its market position. Although Workday, Inc. (NASDAQ:WDAY) growth rate has slowed from previous years, it still expanded revenue by 16% year over year in the latest quarter. As the company scales, its growth is naturally decelerating, but it is achieving impressive results in other financial areas. The gross margin is increasing as more revenue comes from high-margin subscription services compared to lower-margin professional services. Effective expense management has led to profitability, and free cash flow is rising.
Workday, Inc. (NASDAQ:WDAY) role as a critical partner for many large businesses creates high switching costs, giving it a strong economic moat. Analysts believe that despite the stock’s forward P/E ratio of just under 40, its projected 30% annual earnings growth over the next five years suggests an appealing investment. The PEG ratio stands at 1.3, indicating potential for attractive returns even if it’s not a bargain. As of August 15, Oppenheimer has reaffirmed its positive view on Workday, Inc. (NASDAQ:WDAY), maintaining an Outperform rating with a price target set at $300. This optimistic stance is driven by Workday’s solid performance in the Financial Industry Sector (FINS) and potential for improved profit margins.
Polen Global Growth Strategy stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its Q2 2024 investor letter:
“The largest absolute detractors were Workday, Inc. (NASDAQ:WDAY), Paycom Software, and Aon. In line with broader weakness across the enterprise software complex, Workday sold off more than 15% as management guided to organic subscription sales growth in the range of 16.6-17%, 50bps lower than previously guided. Zooming out longer term, we believe nothing has fundamentally changed for Workday. According to our research, it remains a solid, market-leading, long-term compounder with a substantial runway for future growth in the market for both its human capital management and financial software.”
02. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Average Analyst Share Price Target Upside: 31.00%
Average Analyst Share Price Target: $341.24
At number two on our list of ten best enterprise software stocks to buy right now stands CrowdStrike Holdings, Inc. (NASDAQ:CRWD). It currently has an average analyst share price target of $341.24, suggesting a potential upside of 31.00% from its recent price levels. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) recent challenges, including a major IT outage, have led to a significant drop in its stock price, presenting a potential buying opportunity for long-term investors. Despite the temporary setback, analysts believe the company’s position in the cybersecurity market remains strong. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Falcon platform continues to offer top-tier security solutions, and the high integration of its services into clients’ systems makes it difficult for customers to switch providers. This creates a substantial economic moat that could help the company weather the current storm and rebound strongly.
Financially, CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is in a solid position with impressive cash flow and a fortress-like balance sheet. Analysts think the company’s valuation, now more reasonable after the sell-off, reflects an opportunity for growth. If CrowdStrike Holdings, Inc. (NASDAQ:CRWD) can effectively address the issues from the outage and maintain its growth trajectory, it could offer substantial returns for investors. The company’s strong financials and high switching costs for customers suggest that it remains a valuable asset for long-term portfolios. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) stock, while currently undervalued around $260, is expected to stabilize and rise over time. Its robust market position and strong performance make it an attractive buy, even with the recent volatility.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its first quarter 2024 investor letter:
“The high demand for cybersecurity systems is unlikely to abate, which benefited CrowdStrike Holdings, Inc. (NASDAQ:CRWD). The company’s expansion beyond endpoint security to offering security on all cloud workloads, along with its growing product suite in areas such as identity and security information & event management, is driving strong demand for its platform among customers amidst a very active cyberthreat environment. That lifted its shares by 25% this quarter, and we trimmed our position.”
01. Atlassian Corporation (NASDAQ:TEAM)
Average Analyst Share Price Target Upside: 48.26%
Average Analyst Share Price Target: $217.69
Atlassian Corporation (NASDAQ:TEAM) is poised for significant long-term growth, driven by its innovative workplace collaboration tools and the recent introduction of AI-powered features that are rapidly gaining traction among its users. With popular platforms like Jira and Confluence, Atlassian Corporation (NASDAQ:TEAM) has established itself as a leader in helping organizations manage workflows and boost productivity. The launch of Atlassian Intelligence, a suite of AI tools designed to enhance Jira and Confluence, is a key growth catalyst. These tools, including AI-powered search functions and virtual agents, are already being adopted by 30,000 of Atlassian’s 300,000 customers. This rapid adoption underscores the effectiveness and utility of these new features in improving efficiency and reducing the need for human intervention, as evidenced by FanDuel’s 85% reduction in support tickets requiring human attention.
Atlassian Corporation (NASDAQ:TEAM) financial performance in Q3 2024 further solidifies its bullish outlook. The company reported a 30% year-over-year revenue increase to a record $1.19 billion, with cloud revenue growing by 31% and data center revenue by 64%. This growth is particularly notable given Atlassian Corporation’s (NASDAQ:TEAM) strategic shift towards more controlled spending, which resulted in a net income of $12.7 million—a significant improvement from the previous year’s loss.
Despite trading 63% below its all-time high, Atlassian Corporation (NASDAQ:TEAM) is on track to achieve over $4 billion in revenue for fiscal 2024 and aims to more than double this figure within the next five years. The company’s addressable market, valued at $67 billion, continues to expand, and AI could further unlock new opportunities for growth. Wall Street’s consensus reflects this optimism, with the majority of analysts rating Atlassian Corporation (NASDAQ:TEAM) as a buy or overweight, and none recommending selling. Given its strong market position, innovative product offerings, and robust financial performance, Atlassian Corporation (NASDAQ:TEAM) presents a compelling long-term investment opportunity as it continues to lead in the workplace collaboration space.
Artisan Mid Cap Fund stated the following regarding Atlassian Corporation (NASDAQ:TEAM) in its first quarter 2024 investor letter:
“Among our top detractors were Atlassian Corporation (NASDAQ:TEAM), 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.”
While we acknowledge the potential for TEAM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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