Morgan Stanley believes the recent 25% year-to-date decline in Atlassian shares has created an attractive setup. Analyst Keith Weiss argues the selloff has pushed the software stock into a deeply discounted valuation, making it one of the worst performers in large-cap software this year.

The firm contends investor fears about AI's impact on Atlassian's seat-based model are overblown. Instead, Weiss views AI as a tailwind, citing more developers and complex app work that should boost product stickiness and upsell opportunities. The bank also highlights underappreciated enterprise momentum.

Morgan Stanley expects conservative guidance could be beaten, forecasting 22%+ year-over-year revenue growth for the fiscal second quarter and a 26% operating margin. They note Atlassian's user base is roughly 50% non-technical, countering the perception it's solely developer-focused. The pullback is framed as a long-term opportunity.