Tensions in the software sector have escalated rapidly at the start of the new year. Amid the sweeping wave of artificial intelligence, concerns are mounting in the market that AI tools could erode the market share of traditional software companies, particularly in fields such as project management and workflow management, which Wall Street views as among the sectors most vulnerable to “disruption.” However, some analysts believe that Atlassian (TEAM) and monday.com (MNDY) may not be “victims” under the AI threat but could instead emerge as winners.
Both companies are set to release their financial reports imminently. Atlassian is scheduled to announce its second fiscal quarter results after the U.S. market closes on Thursday, while Monday.com will disclose its fourth fiscal quarter data before the market opens next Monday. Cantor Fitzgerald analyst Thomas Blakey expects that the performance of these two companies may help alleviate market concerns about the impact of AI. Over the past year, due to heightened investor anxiety over AI substitution risks, the stock prices of Atlassian and Monday.com have both declined by more than 60%. The market fears that AI-driven new development models and automation tools could diminish the demand for project management software.
However, Blakey notes that both companies remain confident in their ability to integrate their products with AI, particularly in their integration with Claude, a model developed by Anthropic—one of the core AI platforms fueling industry anxiety. He expects Atlassian’s cloud revenue to grow by 22.5% this quarter, with an operating margin reaching 24.5%. Blakey emphasizes that Atlassian remains a “sustainably profitable growth software company” and benefits from the accelerated penetration of AI in project management and software development scenarios.
Despite his optimism about long-term development, Blakey acknowledges that valuation pressures persist. He maintains an “Overweight” rating on Atlassian but has lowered his price target from $240 to $146, citing significant multiple contraction. The new target corresponds to a price-to-sales ratio of 4.5 times the estimated revenue for 2027, down from the historical average of around 7.5 times.
As for Monday.com, Blakey expects its revenue to grow by approximately 23% this quarter, with an EBIT margin of around 11.1%. However, the company faces more specific short-term challenges: due to adjustments in Google’s (GOOG, GOOGL) search algorithms, traffic to Monday.com’s website has declined, forcing the company to increase its marketing and sales expenditures. Nevertheless, Blakey believes the market has been “overly punitive” toward Monday.com, especially given that the company still maintains an annual revenue growth of about 20% and is actively adjusting its market strategy. He points out that Monday.com is positioning itself as a “neutral platform for AI applications,” avoiding forceful bundling with a single AI capability. Instead, it offers open integration, allowing customers to choose between its proprietary AI features or tools from other providers as needed.
Blakey maintains an “Overweight” rating on Monday.com but has lowered his price target from $215 to $148. The new valuation is based on an enterprise value multiple of 3.5 times the estimated revenue for 2027, significantly lower than the average of around 9 times over the past three years.
