Why AppLovin and Atlassian Represent the Best AI Shares to Buy Right Now

The recent undervaluation of software equities has created a compelling opportunity for investors seeking exposure to the artificial intelligence revolution. While many market participants remain concerned about AI disruption to traditional software business models, leading analysts from Morgan Stanley argue that AI-driven productivity gains will actually expand the developer ecosystem and trigger widespread app modernization efforts across enterprises.

This fundamental disconnect between market pessimism and genuine business fundamentals has left several outstanding AI-powered companies trading at attractive valuations. AppLovin and Atlassian stand out as two of the best AI shares to buy for investors looking to position themselves ahead of this transformative technology wave.

The Case for AI-Driven Software Investment

The S&P North American Technology Software Index, which tracks 111 software companies, has dramatically underperformed the S&P 500 by 19 percentage points over the past twelve months. This represents the most severe underperformance in the software sector since the 2022 bear market, and excluding that period, such a significant performance gap hasn’t occurred in over a decade.

Morgan Stanley strategists Sanjit Singh and Keith Weiss challenge this bearish sentiment, suggesting that AI-unleashed productivity gains will not eliminate software demand but rather fuel a massive wave of app modernization initiatives and expand the addressable market for developer tools. Their thesis suggests that today’s depressed valuations create an exceptional buying window for quality software companies with genuine AI capabilities—a scenario investors haven’t encountered since 2015.

AppLovin: A Leader in AI-Powered Advertising Technology

AppLovin has established itself as a dominant force in advertising technology by developing software solutions that help brands execute and optimize targeted marketing campaigns. The company initially built its reputation in mobile gaming monetization but has strategically expanded into the e-commerce advertising vertical through a self-service platform designed to streamline customer onboarding and eventually automate entire marketing workflows.

The company’s competitive moat rests on two critical advantages. First, AppLovin operates on a performance-based revenue model (cost-per-action basis), differing fundamentally from competitors like The Trade Desk which simply extract a percentage of total ad spend. Second, the company’s proprietary artificial intelligence recommendation engine, called Axon, consistently delivers superior targeting performance compared to alternative platforms.

Morningstar analyst Mark Giarelli has documented Axon’s substantial competitive advantages, noting that AppLovin campaigns generate 45% higher return on advertising spend than those run through Meta Platforms’ advertising network, and 115% higher returns compared with secondary platforms including TikTok, Pinterest, Snapchat, and YouTube.

Wall Street consensus estimates project AppLovin’s adjusted earnings will expand at an annual rate of 58% through 2027, while the company has beaten earnings expectations by an average of 21% over the most recent six quarters. With 32 analysts providing coverage, the median target price sits at $774.50 per share, implying 45% upside potential from recent trading levels around $533. For patient investors building positions, this valuation offers an attractive risk-reward profile within the best AI shares currently available.

Atlassian: Enterprise Collaboration Powered by Generative AI

Atlassian has built an influential position in work management and collaboration software, serving both technical teams focused on development and operations (DevOps) and non-technical departments including marketing and human resources. The company also maintains a strong business in IT service management solutions. Gartner has consistently recognized Atlassian as a technology leader across DevOps, marketing work management, and enterprise service management categories.

Atlassian’s differentiation stems from two structural advantages. The company invests more heavily in research and development than direct competitors, a strategy made feasible by its reliance on self-service sales channels and viral word-of-mouth adoption. Additionally, Atlassian uniquely positions its work management platform as the only solution connecting technical teams, non-technical departments, and IT service organizations on a unified platform, creating substantial cross-selling opportunities with existing customers.

The company has recently introduced an ambitious suite of generative artificial intelligence capabilities branded Rovo. This platform enables intelligent search functionality, process automation, and code generation to substantially improve productivity and efficiency across business teams. As an entrenched software vendor with established positions across multiple product categories, Atlassian possesses exceptional upside potential as enterprise AI adoption accelerates.

Wall Street anticipates Atlassian’s adjusted earnings will grow at 22% annually through the fiscal year ending June 2027. At a current valuation of 31 times earnings, this represents reasonable compensation for growth expectations, particularly considering the company has beaten consensus estimates by an average of 16% over the past six quarters. Among 34 analysts tracking the stock, the median price target of $225 per share implies 84% upside from current levels near $122, with shares trading 62% below recent highs. This positioning makes Atlassian an exceptional opportunity for investors seeking to accumulate positions in best-in-class AI shares.

Building Your AI Software Portfolio

Both companies represent the caliber of AI-enabled software businesses that have historically created substantial wealth for patient investors. While previous technology leaders like Netflix and Nvidia demonstrated the magnitude of potential returns available in transformative technology cycles, selecting the right AI shares requires conviction in underlying business models and competitive advantages.

AppLovin’s demonstrated ability to extract measurable performance advantages through artificial intelligence, combined with its expanding total addressable market in e-commerce, positions it as an outstanding choice for investors seeking direct exposure to AI-driven advertising technology. Atlassian’s unique platform architecture and deepening AI capabilities similarly present compelling opportunities for exposure to enterprise software modernization.

For investors confident in the structural case for AI-powered productivity improvements, these two companies represent premier examples of the best AI shares to buy in the current market environment.