Atlassian Named Top Software Pick by Macquarie on AI and Cloud Strength

Macquarie Equity Research has designated Atlassian (NASDAQ: TEAM) as its top pick in the Software & Services sector, anticipating strong performance driven by cloud adoption and artificial intelligence tailwinds. The firm's analysis comes ahead of the software company's upcoming earnings report, where it expects positive results to offset concerns about a near-term revenue slowdown tied to a product transition.

Macquarie's Bull Case

Macquarie initiated its coverage with an Outperform rating and a $130 price target for Atlassian's stock. The firm's positive outlook is based on several key factors:

• Cloud Momentum: Analysts expect subscription annual recurring revenue (ARR) growth to be sustained in the 22-23% range, led by strong outperformance in the Cloud segment.
• AI Tailwinds: The report points to encouraging adoption trends for Atlassian's AI products, such as Rovo and Collections bundles, as significant growth drivers.
• Valuation: The firm cited valuation as a supportive factor for its rating.

Macquarie anticipates that Atlassian's fourth-quarter fiscal 2026 results, scheduled for release after the market close on Thursday, August 6th, will show encouraging outperformance. The firm also expects a relatively in-line initial forecast for fiscal year 2027, which could set the stage for share gains.

Data Center Transition Headwinds

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Despite the optimistic outlook, Macquarie acknowledged that Atlassian's revenue optics are set to show a near-term deceleration. This is primarily due to the planned end-of-life for its Data Center product in calendar year 2029, which is influencing customer behavior and accounting dynamics.

Macquarie estimates that approximately $220 million in fiscal 2026 Data Center revenue will not recur in fiscal 2027 as customers migrate to other offerings. Reflecting this transition, the research firm reduced its fiscal 2027/28 revenue estimates for Atlassian by 1.6% and 2.6%, respectively, and its earnings per share estimates by 6.2% and 11.4%.

Analyst and Market Context

Macquarie is not the only firm adjusting its models for the Data Center transition. The source material notes that BofA Securities recently lowered its price target on Atlassian, while Raymond James also cut its fiscal 2027 estimates, citing the same headwinds.

However, Macquarie believes the upcoming earnings report could improve sentiment and frame Atlassian as an "AI winner." This view is supported by recent company announcements, including new capabilities in its Jira software designed to coordinate AI agents within development workflows, signaling a strategic pivot towards usage-based pricing and AI integration.