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TEAM

Could AI Really Kill Atlassian's Business? Here's Why Wall Street Might Be Wrong

April 03, 2026 — 09:05 am EDT

Written by

Anthony Di Pizio for

The Motley Fool->

Key Points

- Wall Street is concerned AI will decimate the software industry by allowing enterprises to build their own tools.

- Atlassian created software products like Jira and Confluence, and is enhancing them with new AI capabilities.

- Customers are spending more money than before, yet the stock is now the cheapest it has ever been.

- 10 stocks we like better than Atlassian ›

Atlassian (NASDAQ: TEAM) created a suite of software products designed to boost productivity for enterprises by fostering collaboration between employees, and by streamlining workflows. Its stock has plummeted by 57% already this year, and it's down by a whopping 85% from its 2021 record high -- even though its business looks stronger than ever.

The stock is down because Wall Street believes artificial intelligence (AI) is about to decimate the software industry, and the concerns seem quite logical. AI could replace a large chunk of the workforce, threatening businesses like Atlassian that charge their enterprise customers on a per-user basis. Enterprises could also use AI to create their own software tools, replacing expensive third-party providers like Atlassian.

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But the evidence so far suggests those worries might be overblown. Atlassian is using AI to enhance its existing software products, and this strategy has encouraged its customers to spend even more money than before. Atlassian stock has never been this cheap, so here's why the crash might actually be a buying opportunity.

Image source: Getty Images.

Atlassian is actually using AI to its advantage

Atlassian's two flagship software products are Jira and Confluence. Jira is a digital space where software development teams can collaborate, allowing them to rapidly troubleshoot bugs and launch upgrades. Confluence, on the other hand, is a digital space for the entire organization, where employees from all departments can share important documents and discuss operational progress.

The company has added two AI products to its portfolio since 2024. First is Loom, an innovative platform that allows employees to create short videos to convey messages or instructions to their colleagues, eliminating the need for formal meetings. It uses AI to autonomously create chapters and summaries, and it will even post a transcript directly to Confluence for employees to read.

The second is Rovo, a platform that specifically enhances Jira and Confluence. It includes a powerful search function that can instantly locate information from across the entire organization, whether it's stored in an Atlassian software app or a third-party app like Microsoft OneDrive. Rovo also features a chatbot which employees can collaborate with on projects, in addition to a development studio where they can create AI agents to automate specific workflows.

Rovo had over 5 million monthly active users at the conclusion of Atlassian's fiscal 2026 second quarter (ended Dec. 31), which is impressive for a product that is less than two years old.

AI products are boosting Atlassian's revenue

Atlassian had $6 billion in annual run-rate revenue at the end of its fiscal 2026 second quarter, which was a record high. Plus, the company's cloud business, which is where most customers now deploy their Atlassian software, had a net revenue retention rate of 120% during the quarter, which was up for the third consecutive period.

It meant existing customers were spending 20% more money compared to the same quarter last year, and management said the expanding use of its AI platform was the primary reason.

But that wasn't the only sign of momentum in Atlassian's business. The number of deals worth more than $1 million in annual revenue the company signed nearly doubled year over year in the second quarter, so there is clearly plenty of demand for products like Jira, Confluence, Loom, and Rovo among some of the highest-spending enterprises.

But Atlassian isn't totally out of the woods. AI is absolutely making employees more productive in many organizations, which means smaller workforces might be inevitable in the future. Therefore, Atlassian could suffer a decline in revenue if it continues charging customers on a per-user basis. Management hasn't outlined a plan to change its revenue model yet, but