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## Agentic Coding Poised to Drive Next Phase of AI Growth **Wells Fargo** has identified **agentic coding**, characterized as AI capable of building AI, as a significant catalyst expected to ignite a new wave of artificial intelligence development and substantially boost coding productivity. This assessment suggests that investors may be underestimating the profound impact of this technological shift, which began with the launch of agentic coding in February 2025. Unlike generative AI, which primarily focuses on content creation, agentic AI facilitates autonomous task handling, allowing for the creation of AI agents through plain-text prompts that then devise the necessary code. This evolution underscores a strategic shift towards greater automation and efficiency in software development. ## Key Players and Market Response In response to this emerging trend, **Wells Fargo** has highlighted three software companies positioned to benefit from the agentic AI boom, all holding "Strong Buy" ratings according to the TipRanks database. These include **HubSpot, Inc. (HUBS)**, **Atlassian Corporation (TEAM)**, and **Braze (BRZE)**. The market's reaction to agentic AI advancements has been varied, reflecting both optimism for new growth opportunities and concerns over intensifying competition, particularly in the Software as a Service (SaaS) sector. ## Atlassian's Strategic Expansion in AI **Atlassian Corporation (TEAM)**, a software giant with an **$45.19 billion market capitalization** and impressive gross profit margins of **82.84%**, is making strategic moves to capitalize on the agentic AI wave. The company announced definitive agreements to acquire **The Browser Company** for **$610 million** and engineering intelligence company **DX** for approximately **$1 billion** in cash and restricted stock. These acquisitions, both expected to close in the second quarter of fiscal year 2026, aim to enhance Atlassian's cloud platform and provide enterprises with improved capabilities to measure the effectiveness of their AI investments in engineering teams. The integration of DX's platform is expected to offer visibility into AI adoption impact, developer experience, and productivity insights, a critical need as nearly all of DX's current customers are already Atlassian users. Analysts have responded positively, with **Cantor Fitzgerald** reiterating an "Overweight" rating and **Bernstein** an "Outperform" rating, citing these acquisitions as strategic wins. **UBS** and **Jefferies** have also raised price targets to **$330** and **$325**, respectively, reflecting confidence in Atlassian's AI-driven transformation and projected **18% revenue growth for FY2026**. ## Braze Leverages Agentic AI for Customer Engagement **Braze (BRZE)**, a software company specializing in customer engagement for enterprise clients, has demonstrated strong performance driven by agentic AI advancements. Its AI-powered platform, **BrazeAI**, facilitates enhanced customer engagement through relevant messages, personalized content, and automated marketing processes. In its fiscal 2Q26 report, Braze exceeded expectations, reporting **revenue of $180.1 million**, a **24% year-over-year gain**, surpassing forecasts by **$8.5 million**. Non-GAAP earnings reached **15 cents per share**, beating predictions by **12 cents per share**. **Wells Fargo analyst Ryan MacWilliams** maintains an "Overweight" (Buy) rating on BRZE with a **$40 price target**, indicating a potential **41% upside**, attributing Braze's continued strength to agentic AI's role in boosting marketing velocity and sophisticated B2C marketing programs. ## HubSpot Navigates Shifting Competitive Landscape **HubSpot (HUBS)**, a prominent marketing software platform, is actively integrating agentic AI into its features for prospecting and personalization agents. However, the company has recently faced significant competitive pressure, with its stock experiencing a **35% year-to-date decline**. This downturn was partly exacerbated by **OpenAI's** direct foray into the application software market in early October 2025, which saw **HubSpot's shares plummet 7.2% in a single day**. OpenAI's introduction of internally developed tools for sales, inbound marketing, and customer support, core areas for HubSpot, triggered broader concerns across the SaaS sector. Despite these challenges, **Cantor Fitzgerald** reiterated its "Overweight" rating and maintained a **$775 price target**, while **Wells Fargo** initiated coverage with an "Overweight" rating and a **$685 price target**, signaling confidence in HubSpot's long-term prospects. The company is actively responding by unveiling over 200 product enhancements at its INBOUND 2025 conference, emphasizing a "human + AI hybrid" approach with intelligent assistants and AI-powered automation. ## Broader Implications and Market Outlook The emergence of agentic AI marks a pivotal shift in the evolution of artificial intelligence, with the market projected to grow significantly. Valued at **$7.28 billion in 2025**, it is expected to reach **$41.32 billion by 2030**, reflecting a **robust 41.48% CAGR**. This technological advancement is anticipated to transform various sectors, including healthcare, finance, logistics, and manufacturing, by enabling autonomous decision-making and enhancing efficiency. Organizations leveraging agentic AI have reported a **35% reduction in decision-making time** and a **42% improvement in resource allocation efficiency**. Major players like **NVIDIA (NVDA)** are also crucial enablers, providing specialized hardware and software solutions to drive advanced AI workloads. The competitive landscape, exemplified by OpenAI's aggressive expansion into application software, will continue to shape the strategies of established incumbents and new entrants alike. Investors will closely monitor further developments in agentic AI capabilities, strategic acquisitions, and the evolving competitive dynamics within the SaaS and broader AI sectors, as companies strive to leverage this transformative technology for sustainable growth and market leadership.
## Robust Financial Performance Precedes Key AI Product Demonstrations **Braze, Inc.** (**BRZE**), a prominent software-as-a-service (SaaS) provider in the marketing automation sector, announced strong financial results for its second quarter of fiscal year 2026. The company’s performance arrives amidst high anticipation for its upcoming **AI-powered product innovations**, scheduled for unveiling at its annual customer conference, Forge, later this September. This strategic alignment of financial strength and technological advancement positions Braze for potential revaluation within the competitive customer engagement market. ## Detailing Q2 FY2026 Achievements and AI Strategy For the second quarter of fiscal year 2026, **Braze** reported revenue of **$180.1 million**, marking a 23.8% increase year-over-year and surpassing analyst estimates of $171.6 million by 5%. Concurrently, non-GAAP adjusted earnings per share (EPS) reached **$0.15**, significantly outperforming the consensus estimate of $0.03. Building on this momentum, the company raised its full-year FY2026 revenue guidance to a range of **$717 million to $720 million**, indicating approximately 21% year-over-year growth at the midpoint. Non-GAAP operating income for FY2026 is projected between **$24.5 million and $25.5 million**, reflecting a 3.5% operating margin. Central to Braze's future outlook is its aggressive **AI-first customer engagement strategy**. The company’s Forge conference, set to take place from September 29 to October 1 in Las Vegas, will serve as the platform to showcase its "AI vision" and new product innovations. These offerings will include generative, predictive, and agentic solutions designed to deliver "composable intelligence" for customer engagement. Braze has confirmed integrations with **Tier-1 AI engines**, notably highlighting that **Google Gemini Flash** has demonstrated faster performance in testing. The company also enables customers to utilize their own Google Gemini API keys with BrazeAI™ features. ## Market Reaction and Analytical Insights The market's bullish sentiment toward **Braze** is largely driven by its consistent financial outperformance and its clear, proactive strategy in integrating **artificial intelligence** across its platform. **Braze's** real-time data architecture, which processes over 10 trillion data points, provides a foundational advantage, positioning it as an "AI-native marketing cloud." This allows for highly personalized, one-to-one customer interactions at scale, differentiating it from legacy systems. The strategic acquisition of **OfferFit**, an AI decisioning company, for **$325 million** further underscores Braze's commitment to AI leadership. This acquisition is anticipated to contribute approximately 2 percentage points to the full fiscal year 2026 year-over-year growth and enhances Braze's Project Catalyst initiative, an AI agent designed for personalized experiences. The company's focus on enterprise clients, now accounting for 62% of its annual recurring revenue (ARR) from customers with over $500,000 ARR, demonstrates a calculated move towards a stable, high-value customer base. ## Broader Context and Future Implications The customer engagement technology market is projected to expand significantly, reaching **$30 billion by 2028**. Braze’s emphasis on AI-driven product expansion and disciplined cost management is expected to capture a substantial share of this growth, driving both higher customer value and increased profitability. While the company's price-to-sales (P/S) ratio of 4.42 is below the industry average of 5.1x, suggesting a potential undervaluation, its operational strategy aims to improve its Rule of 40 score and overall profitability. **William Magnuson**, CEO of Braze, highlighted the company's operational discipline, stating, "We have now posted 3 straight quarters of positive non-GAAP operating income and free cash flow as well as 5 straight quarters of positive non-GAAP net income." He further emphasized the company's momentum in new business and competitive win rates against legacy systems. CFO **Isabelle Winkles** underscored the strength of subscription revenue, comprising 95% of total revenue, and a non-GAAP gross profit margin of 69.3%. ## Expert Commentary Analysts and management alike point to **Braze's** differentiated position in the market. **Magnuson** noted the rapid adoption of AI features across the platform, indicating that "The differentiation that Braze has always been able to deliver due to our power and our flexibility is becoming more accessible to more of our customer base." This sentiment is echoed by the robust dollar-based net retention (DBNR) of 109% for all customers and 112% for high-ARR accounts, signaling strong customer loyalty and expansion within its existing base. The company's ability to integrate reinforcement learning and generative AI positions it to transform customer engagement teams from tactical operators into "strategic conductors of autonomous customer engagement systems." ## Looking Ahead Investors will closely monitor the developments at the upcoming Forge conference for further details on **Braze's AI product roadmap** and its tangible impact on customer engagement. The company's guidance for continued revenue growth and improved profitability, alongside the successful integration of OfferFit, sets a positive trajectory. With bullish projections suggesting a potential reach of **$70 per share in the near term** and a **$100 billion valuation within the next decade**, Braze stands as a key player in the evolving landscape of AI-driven marketing infrastructure. Continued execution on its AI strategy and disciplined financial management will be crucial determinants of its long-term market success.