Why Now Is the Best Time to Buy Artificial Intelligence Stocks: A Decade-Long Opportunity Emerges

The technology sector is experiencing an unusual phenomenon: despite artificial intelligence stocks showing tremendous long-term potential, investor enthusiasm has cooled dramatically. Software stocks—often at the forefront of AI innovation—have significantly lagged the broader market, creating what market analysts describe as a rare buying window. This disconnect between current valuations and future prospects is precisely the kind of moment that separates patient investors from the crowd.

The Market Paradox: Why Investors Are Overlooking AI Opportunities

Over the past twelve months, the S&P North American Technology Software Index, which tracks 111 software companies, has underperformed the S&P 500 by 19 percentage points—marking the worst relative performance for the software industry outside of the 2022 bear market. In fact, going back a full decade, software stocks have never fallen this far behind the broader index during normal market conditions.

The root cause? Widespread anxiety about artificial intelligence disrupting traditional software business models. Many investors fear that AI will cannibalize demand for established software products, forcing companies to reinvent their operations or face irrelevance. This concern is understandable but, according to prominent market researchers, fundamentally misguided.

Morgan Stanley analysts Sanjit Singh and Keith Weiss offer a contrasting perspective. They argue that “productivity unleashed by AI will expand the pool of developers and spur a wave of app modernization initiatives.” In their view, the current pessimism represents not a genuine threat but rather an exceptional entry point—the kind that materializes perhaps once every ten years.

AppLovin: The AI-Powered Advertising Platform Driving 45% Upside

AppLovin has built its reputation in ad technology by helping brands reach consumers and monetize digital content through precisely targeted campaigns. While the company initially made its name in mobile gaming development tools, it has since expanded aggressively into e-commerce advertising—launching a self-service platform designed to streamline client onboarding and eventually automate entire advertising workflows.

What sets AppLovin apart in a crowded market? Two critical competitive advantages. First, its revenue model is performance-based: clients pay for actual results (cost-per-action) rather than ad spending volume. This contrasts sharply with competitors like The Trade Desk, which simply take a percentage of total ad spend. Second—and most importantly—AppLovin’s proprietary AI recommendation engine, called Axon, outperforms competing targeting solutions by substantial margins.

According to Morningstar analyst Mark Giarelli, Axon has been central to AppLovin’s market dominance: “AppLovin is delivering 45% higher return on ad spending compared to Meta Platforms and 115% higher compared with secondary advertising platforms including TikTok, Pinterest, Snapchat, and YouTube.” These aren’t marginal improvements; they’re transformative performance gaps that justify premium pricing and customer loyalty.

The financial picture is equally compelling. Wall Street expects AppLovin’s adjusted earnings to grow at 58% annually through 2027. The company’s current valuation of 66 times earnings might seem steep, yet it’s justified by consistent execution: AppLovin has beaten consensus earnings estimates by an average of 21% over the last six quarters, demonstrating management’s ability to exceed expectations.

Among 32 analysts covering the stock, the median price target stands at $774.50 per share. At the most recent price of $533, this implies 45% upside potential—a meaningful return for patient investors willing to build a position in what promises to be an AI-driven future in digital advertising.

Atlassian: Building the AI-Driven Enterprise Collaboration Engine

Atlassian takes a fundamentally different approach to artificial intelligence in the enterprise software space. The company develops work management and collaboration platforms used by development and operations (DevOps) teams, marketing departments, and human resources functions. It also produces IT service management solutions that have earned Atlassian recognition from Gartner as a technology leader across multiple categories: DevOps platforms, marketing work management, and enterprise service management.

Atlassian’s competitive moat rests on two pillars. First, the company invests more heavily in research and development than peers, a strategy that works precisely because Atlassian relies on self-service sales and organic word-of-mouth marketing rather than expensive enterprise sales teams. Second—and uniquely—Atlassian is the only work management platform capable of connecting technical teams, non-technical teams, and IT operations on a unified system. This architectural advantage drives superior collaboration across organizations and creates numerous opportunities to expand within existing customers through upselling.

The company’s response to the artificial intelligence boom has been measured but significant. Atlassian introduced Rovo, a suite of generative AI capabilities designed to enhance productivity and efficiency. Rovo provides intelligent search across organizational data, automates repetitive processes, and generates code to accelerate development cycles. For a company already entrenched across multiple business functions within large enterprises, these AI features represent powerful tools for deepening customer relationships and justifying higher contract values.

Wall Street projects Atlassian’s adjusted earnings will grow at 22% annually through the fiscal year ending June 2027. The current valuation of 31 times earnings looks reasonable given the company’s track record: Atlassian has beaten consensus earnings estimates by an average of 16% over the last six quarters. Among 34 analysts tracking the stock, the median target price is $225 per share, implying 84% upside from the recent price of $122—a substantial opportunity for investors entering at current levels.

The Historical Evidence: Why AI Stocks Deserve Your Attention

The concern that current valuations already price in AI upside rarely reflects market reality. Consider the historical precedents: when Netflix joined investment recommendation lists on December 17, 2004, a $1,000 investment at that time grew to $460,340. Similarly, Nvidia’s recommendation on April 15, 2005 transformed a $1,000 position into $1,123,789. These weren’t flash-in-the-pan performers; they were companies riding transformative technology waves while skeptics questioned their business models.

The broader track record further supports this thesis. Balanced investment strategies focusing on quality artificial intelligence stocks have generated cumulative returns of 937%—dramatically outpacing the S&P 500’s 194% return over comparable periods. When structural pessimism depresses valuations for best-in-class artificial intelligence stocks, history suggests patience is rewarded.

The Investment Case: Why These Best Artificial Intelligence Stocks Matter Now

The opportunity before investors today is neither speculative nor theoretical. AppLovin and Atlassian represent the highest caliber of artificial intelligence stocks because they’ve already embedded AI into their operations, demonstrated measurable competitive advantages, and earned analyst confidence through consistent execution.

The market’s current pessimism about software companies and artificial intelligence is creating precisely the conditions that produce generational returns: genuine business momentum meeting depressed valuations. For investors with a multi-year horizon and appetite for moderately-sized positions, building exposure to these best artificial intelligence stocks represents a rational response to a decade-long opportunity that may not resurface for years to come.