Atlassian to Accelerate Cloud Migration With Amazon Web Services

Atlassian TEAM shares have surged 81.9% in the past six-month period, outperforming the Zacks Internet - Software industry, Zacks Computer and Technology sector and the S&P 500 index’s growth of 21%, 9.2% and 12.7%, respectively. This reflects investors’ confidence in Atlassian’s robust product portfolio, strong partnerships and financials.Recently, Atlassian collaborated with Amazon’s AMZN Amazon Web Services (“AWS”) to fast-track cloud transformation initiatives and deliver advanced artificial intelligence (AI) and security solutions to enterprises. Together, the two companies will help enterprise customers transition from Atlassian's Data Center business to Atlassian Cloud, powered by AWS.Atlassian Cloud will also offer services related to artificial intelligence, automation, analytics and unified search features. These services and features will enable enterprises to improve productivity while ensuring robust security and compliance. Enterprises will now be able to leverage Atlassian’s two decades of data making operations more efficient and targeted.The collaboration will also aid enterprises in developing applications on Atlassian's Forge platform using AWS technologies, which include generative AI tools like Amazon Bedrock.Rapid Cloud Adoption Drives TEAM’s GrowthAtlassian is benefiting from the ongoing digitalization of work from organizations and the rapid adoption of cloud services. According to a Mordor Intelligence report, the global enterprise collaboration market is likely to reach approximately $90.6 billion by 2028 from $54.5 billion in 2023, witnessing a CAGR of 10.7%.Furthermore, Atlassian is driving migration to the cloud with the integration of AI in its entire cloud platform. The company is also trying to add momentum to the cloud migration with the integration of the latest cloud offerings, including Jira Product Discovery Premium, Compass Premium and Guard Premium.These factors are expected to add immense value to TEAM’s customers, in turn, driving Atlassian’s top-line growth. The Zacks Consensus Estimate for TEAM’s fiscal 2025 revenues is pegged at $5.08 billion, indicating year-over-year growth of 16.64%. The Zacks Consensus Estimate for TEAM’s fiscal 2025 earnings is pegged at $3.18, suggesting year-over-year growth of 8.5%.Atlassian 6 Month PerformanceImage Source: Zacks Investment ResearchTEAM Faces Economic and Competitive HeadwindsAtlassian’s near-term prospects might be hurt by softening IT spending. Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This does not bode well for Atlassian’s prospects in the near term.Although Atlassian has long been a strong contender in the collaboration and workflow software space, the market has continuously been crowded by industry leaders like Broadcom AVGO, Microsoft MSFT, Alphabet, Salesforce and IBM.Atlassian’s JIRA software matches solutions like Broadcom’s Rally Software, Microsoft’s Azure DevOps Server and IBM’s Rational. TEAM’s Confluence product competes with Salesforce Chatter and Alphabet’s Google Apps for Work.Intensifying competition in the cloud forces Atlassian to resort to competitive pricing and other methods to safeguard its market share. Atlassian’s research and development (R&D) costs are continuously rising, driven by increased investment in artificial intelligence to enhance its product capabilities. In the last reported financial results for first-quarter fiscal 2025, its non-GAAP R&D expenses soared 23.7% year over year. Its revenues grew 21.5% year over year.What Investors Should Do With TEAM StockAtlassian’s aggressive bid to increase its product portfolio has helped it launch a number of solutions this year, but, it has also increased the company’s research and development expenses. Massive investments in R&D to boost product offerings and capabilities might dampen its margins.Moreover, Atlassian’s near-term prospects might be hurt by softening IT spending amid ongoing macroeconomic uncertainties. Atlassian also carries a Zacks Value Style Score of F at present, which indicates that the stock is highly overvalued at present.Considering all these factors, we suggest investors to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Atlassian Corporation PLC (TEAM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks