Why These Are the Best AI Stocks to Buy in Today's Market

The technology sector is facing a critical inflection point. While the broader stock market continues to reach new highs, software stocks have experienced a significant divergence from the overall market recovery. This unexpected disconnect is creating exactly the kind of entry opportunity that savvy investors encounter perhaps once every decade—and it’s driven by artificial intelligence anxiety that may be misplaced.

According to recent market analysis, the S&P North American Technology Software Index, which encompasses 111 software companies, has trailed the broader S&P 500 by an abnormally wide margin throughout the past year. This represents the worst relative performance for software as a sector since the bear market of 2022. Looking beyond that period, this degree of underperformance is virtually unprecedented in the last ten years—a reality that suggests the market may be pricing in an unnecessarily pessimistic outlook for software companies.

Market Anxiety Over AI Is Creating Mispricings

The root cause of this weakness is straightforward: many investors worry that artificial intelligence will fundamentally disrupt traditional software business models and cannibalize demand for established software products. This concern has created a cascade of selling pressure that doesn’t align with the actual opportunity in front of software companies today.

However, leading financial analysis teams see this dynamic differently. Analysts from Morgan Stanley, including Sanjit Singh and Keith Weiss, argue that “productivity unleashed by AI will expand the pool of developers and spur a wave of app modernization initiatives.” This perspective shifts the narrative from disruption to acceleration—suggesting that AI will ultimately expand software markets rather than shrink them.

In this context, the current weakness in software stocks represents a genuine turning point for contrarian investors. Two companies stand out as the best AI stocks to buy right now: AppLovin and Atlassian. Both have positioned themselves to win as enterprises integrate AI into their core operations.

AppLovin: AI-Powered Advertising Platform With 45% Appreciation Potential

AppLovin has built a compelling competitive moat in the digital advertising technology space. The company develops ad tech software that enables brands to create and deploy targeted advertising campaigns while helping publishers monetize their digital content. While the company initially established itself in mobile gaming—assisting developers with app marketing and monetization—it has since expanded into the fast-growing e-commerce advertising segment.

What separates AppLovin from competitors is its distinctive approach to generating revenue and deploying artificial intelligence. Unlike traditional advertising platforms such as The Trade Desk, which take a percentage cut of overall ad spending, AppLovin operates on a performance-based model where compensation is directly tied to actual campaign results (cost-per-action). This alignment of incentives creates a natural advantage for the company.

The company’s technological edge is particularly evident in its proprietary AI recommendation engine called Axon. According to Morningstar analyst Mark Giarelli, this system has been central to AppLovin’s competitive success. Giarelli noted that “AppLovin is driving a 45% higher return on ad spending than Meta Platforms and 115% higher compared with secondary advertising platforms like TikTok, Pinterest, Snapchat, and YouTube.” These performance metrics suggest that AppLovin’s AI technology delivers tangible, measurable benefits to advertisers.

The financial outlook supports the bullish case. Wall Street consensus expects AppLovin’s adjusted earnings to grow at 58% annually through 2027, a growth rate that justifies the current valuation multiple of 66 times earnings—especially considering the company has beaten consensus earnings estimates by an average of 21% over the last six quarters. Among 32 research analysts covering the stock, the median target price stands at $774.50 per share, implying approximately 45% upside from recent trading levels of $533. This positions AppLovin as one of the best AI stocks to buy for growth-oriented investors with a medium-term investment horizon.

Atlassian: Enterprise Software Gets Smarter With Generative AI

Atlassian operates in the work management and collaboration software space, serving both technical teams (DevOps operations) and business-focused departments including marketing and human resources. The company also develops IT service management solutions. Gartner has recognized Atlassian as a technology leader across multiple categories: DevOps management, marketing work management, and enterprise service management platforms.

Atlassian’s competitive advantages stem from two primary sources. First, the company invests more heavily in research and development compared to direct competitors, which is feasible because Atlassian relies on self-service customer onboarding and organic word-of-mouth growth rather than expensive direct sales teams. Second, Atlassian is the only work management software provider that unifies technical, non-technical, and IT service teams on a single integrated platform. This architectural advantage not only fosters superior collaboration across enterprises but also creates multiple opportunities to expand relationships by selling additional products to existing customers.

The company’s artificial intelligence strategy centers on a new suite of generative AI capabilities called Rovo. These features include intelligent search across enterprise data, process automation capabilities, and code generation tools designed to enhance productivity and efficiency for business teams. For a well-established software vendor with multiple product categories and a large existing customer base, the AI opportunity represents a substantial tailwind as enterprises accelerate their digital transformation initiatives.

Wall Street estimates that Atlassian’s adjusted earnings will increase at 22% annually through the fiscal year ending in June 2027. The current valuation of 31 times earnings appears reasonable given that the company has exceeded consensus earnings estimates by an average of 16% over the last six quarters. Among 34 research analysts, the median target price for Atlassian is $225 per share, representing approximately 84% upside from the current share price of $122. With shares trading 62% below their recent highs, this represents a compelling entry point for investors seeking exposure to best AI stocks in the enterprise software category.

Taking Action: Why These Are the Best AI Stocks to Buy Now

The market’s pessimistic view on software stocks creates a rare alignment of favorable circumstances for investors willing to buy. Two companies—AppLovin and Atlassian—have demonstrated the technical capabilities, market positioning, and financial momentum to capture the significant opportunity created by artificial intelligence deployment across the economy.

AppLovin’s performance-based advertising model combined with superior AI targeting technology positions the company to capture share from less sophisticated competitors. Atlassian’s platform-based approach and generative AI capabilities position it to deepen relationships with thousands of enterprise customers. Both companies merit consideration as core holdings for investors seeking exposure to the artificial intelligence theme through established, profitable software companies rather than early-stage, unproven AI startups.

The confluence of depressed valuations, strong earnings growth expectations, and significant upside from analyst price targets creates a compelling case for why these represent the best AI stocks to buy in today’s market environment. Patient investors who build small positions in these companies may look back on this period as a turning point in their investment journey.