Earlier this month, Anthropic released a new feature for Claude subscribers. Cowork builds on its successful Claude Code agent to enable you to use the agentic artificial intelligence (AI) for just about anything you want. It's particularly good at task management, which has sent shares of enterprise software developer Atlassian (TEAM 1.29%) crashing. The stock is down 21% so far in 2026.
Nonetheless, most Wall Street analysts think the reaction is overblown. Even after updating their price targets in the wake of Anthropic's release and ahead of fourth-quarter earnings, almost every analyst sees significant upside in the stock from its current price. With a median price target of $225 on Wall Street, that implies 76% upside over the next year.
Image source: Getty Images.
Is AI friend or foe?
While Anthropic's new Cowork feature looks powerful and could potentially replace some of what workers do with Atlassian's work collaboration software, it's unlikely Atlassian's subscriptions will be replaced overnight. There are significant switching costs to move an entire workforce from one set of software tools to a whole new way of doing things. The lost productivity in the transition isn't worth switching for most.
In the meantime, Atlassian continues to integrate AI features into its products. Over 3.5 million workers use its AI capabilities as of the end of October. Importantly, it's seeing strong engagement growth as a result of third-party AI tools like Claude Code, which expand their use of Jira, its project management and issue-tracking software originally designed for software developers (but now used for all sorts of projects).
Atlassian introduced Rovo, its AI agent platform, in May 2024. It can collect and organize data across Atlassian's software suite, providing insights and generating workflows based on proprietary enterprise data. That's the same type of features Claude Cowork aims to offer, but built into the software enterprise teams already use. With AI as a major focus of Atlassian's development team, it should be able to maintain its position even as more general AI tools come to market.
NASDAQ: TEAM
Key Data Points
Atlassian has used its growing AI capabilities to push more customers to its cloud-based subscription, as it's sunsetting its data center software in the next few years. Transitioning the entire customer base to the cloud will help reduce overall software maintenance costs and increase the speed at which new features can be rolled out. It'll complete the transition in early 2029.
While analysts have recently updated their price targets for Atlassian, most still see tremendous upside in the stock. Mizuho analysts lowered their price target from $245 to $225 (76% upside). Citigroup analysts lowered their price target from $240 to $210 (64% upside). With the stock trading for 26 times forward earnings estimates, it's an excellent price for a software company growing earnings at a rate of 25% per year.
