The Nasdaq Composite (^IXIC 0.39%) advanced 930% over the last two decades, compounding at 12.3% annually. That period covers a broad range of economic conditions, so investors can expect similar returns during the next decade. That is particularly true because the Nasdaq is heavily weighted toward technology stocks, where artificial intelligence (AI) promises to be a massive tailwind.
Most Wall Street analysts currently see buying opportunities in Nvidia (NVDA 0.88%) and Atlassian (TEAM 0.92%), as detailed below:
- Among 65 analysts, Nvidia has a median target price of $212 per share. That implies 26% upside from its current share price of $168.
- Among 33 analysts, Atlassian has a median target price of $250 per share. That implies 45% upside from its current share price of $172.
Here's what investors should know about these artificial intelligence stocks.
Image source: Getty Images.
Nvidia: 26% upside implied by the median target price
Nvidia is the semiconductor company that invented the graphics processing unit (GPU), a chip that has become synonymous with artificial intelligence. While CPUs run operating systems and software, GPUs accelerate complex tasks like rendering graphics, training machine learning models, and running AI inference workloads. Nvidia is the dominant supplier of AI accelerators with more than 80% market share.
The company is well positioned to hold its position as the gold standard in AI infrastructure as physical AI technologies like autonomous robots and self-driving vehicles become increasingly popular. Nvidia not only designs data center GPUs and embedded processors to handle AI on devices, but also provides pretrained models and software tools that assist developers in writing applications.
CEO Jensen Huang told attendees at the GTC conference earlier this year, "We build technology that almost every self-driving car company uses." For instance, Tesla employs Nvidia GPUs to train AI models for its robotaxis. Alphabet's Waymo and Amazon's Zoox use Nvidia hardware and software to train models in data centers, but also to power decision-making in robotaxis.
Similarly, Nvidia Isaac is a platform that brings together code libraries, pretrained models, and frameworks to support the development of autonomous robots, including humanoid robots, manipulator arms, and industrial mobile robots. Amazon uses those tools to build fulfillment center robots, and most companies developing humanoid robots also use some combination of those tools, according to Morgan Stanley.
Wall Street expects Nvidia's adjusted earnings to increase at 47% annually through the fiscal year ending January 2027. That makes the current valuation of 49 times earnings look relatively cheap. Patient investors comfortable with volatility should have a position in this stock simply because it sits at the center of the AI revolution, and now is a reasonable time to buy a few shares.
Atlassian: 45% upside implied by the median target price
Atlassian specializes in work management and team productivity software. The company is best known for Jira, which helps businesses plan, organize, and track work across technical (development and IT) and non-technical (marketing and finance) teams. But its portfolio also includes other major products, such as Confluence for knowledge management and Jira Service Management for IT support.
Research company Gartner recently ranked Atlassian as a leader in DevOps platforms, which facilitate collaboration between development and operations teams by supporting the creation, maintenance, and management of software products. Similarly, Forrester Research recently ranked the company as a leader in knowledge management platforms, which facilitate teamwork by creating a centralized hub where documents are organized and shared.
Last year, Atlassian launched Rovo, a conversational AI tool that supports intelligent search and surfaces personalized insights by analyzing information across internal tools and third-party applications. Rovo can also automate workflows in products like Jira and Confluence. Gartner recently ranked Atlassian as an emerging leader in generative AI technologies. And Morgan Stanley sees it as one of the companies best positioned to profit from AI agents.
Wall Street expects Atlassian's adjusted earnings to increase at 19% annually through the fiscal year that ends in June 2027. That makes the current valuation of 47 times adjusted earnings look mildly expensive. But analysts have consistently underestimated the company in the past. Atlassian beat the consensus earnings estimate by an average of 16% during the last four quarters. I think that trend will continue. Patient investors should consider buying a small position in this AI stock today.
