History Says the Nasdaq Will Soar: 2 Artificial Intelligence (AI) Stocks to Buy Now, According to Wall Street

The Nasdaq Composite's 12.3% annual return over two decades is expected to continue, driven by AI's significant tailwind, prompting Wall Street analysts to highlight Nvidia and Atlassian as compelling investment opportunities. Nvidia, dominating the AI accelerator market with over 80% share, is projected for 47% annual earnings growth through FY2027, with a median target price indicating 26% upside. Concurrently, Atlassian, an emerging leader in generative AI for work management, is forecasted for 19% annual earnings growth through FY2027, with its median target price suggesting 45% upside.

Analysis

The outlook for artificial intelligence continues to be a primary driver for technology sector investments, with Wall Street analysts identifying specific opportunities in Nvidia (NVDA) and Atlassian (TEAM). Nvidia maintains a dominant position in the AI hardware market, holding over 80% market share in AI accelerators, which are integral for training models used by companies like Tesla, Alphabet's Waymo, and Amazon. This market leadership underpins a strong growth forecast, with Wall Street expecting adjusted earnings to increase 47% annually through fiscal 2027. Consequently, its current valuation of 49 times earnings is viewed as relatively reasonable, supported by a median analyst price target of $212 that implies a 26% upside. Concurrently, Atlassian is positioned as an emerging leader in generative AI for work management software, with its Rovo tool enhancing its established product suite including Jira and Confluence. Despite a valuation of 47 times adjusted earnings being considered 'mildly expensive,' analysts project a 45% upside to a median target price of $250. This bullish outlook is bolstered by a projected 19% annual earnings growth and a consistent history of beating consensus earnings estimates by an average of 16% over the last four quarters.

Key Decisions for Investors

• Investors may consider Nvidia's valuation of 49 times earnings a justifiable entry point, given its foundational role in the AI ecosystem, over 80% market share in accelerators, and a projected 47% annual earnings growth.
• For Atlassian, the significant 45% implied upside to its median price target presents a compelling growth opportunity, though this should be weighed against its 'mildly expensive' valuation, with attention paid to its strong track record of exceeding earnings expectations.
• Given the different risk-return profiles, consider allocating to Nvidia for exposure to established AI infrastructure leadership and to Atlassian for higher-upside potential in the AI-driven software application layer.
• Closely monitor execution on AI product roadmaps for both companies, as Atlassian's ability to monetize Rovo and Nvidia's capacity to maintain its technological lead are critical catalysts for realizing their respective analyst price targets.