Wall Street analysts see Datadog and Atlassian surging 102% and 170%, respectively, despite a software bear market. The S&P North American Technology Software Index has dropped 24% from its peak, pressured by fears that AI coding tools will reduce future demand for traditional software.

Both companies are integrating artificial intelligence into core offerings. Datadog’s AI engine Watchdog automates IT issue detection, while Atlassian’s Rovo assistant boosts productivity across technical and non-technical teams. Analysts argue incumbents can benefit from AI adoption as delivery mechanisms for new features.

Investors should watch for sustained earnings growth and reasonable valuations. Datadog trades at 66 times earnings, while Atlassian’s 30x multiple appears more attractive. Upside targets assume strong execution as both companies expand AI-driven capabilities in competitive enterprise markets.

Market sentiment remains cautious, but AI integration could reverse recent declines if customer adoption accelerates and expansion trends hold.