ESTC - Elastic: Generative AI Opportunity Awaits

2024-06-03 13:14:43 ET

Summary

• Elastic has strong growth potential in the coming year despite weakness in the software space.
• The company's search AI Lake and Cloud serverless offering will bring it to the next level and provide quick search in a cloud-native platform.
• Elastic's prudent guidance sets a 16% revenue growth for the coming fiscal year, with a focus on customer success for large organizations.

Elastic N.V. ( ESTC ) is providing investors with an opportunity for significant growth in the coming year. The company has continued to show strong results as many companies are seeing weakness in the software space. Yet the company is still not seeing AI applications boosting revenue growth with that to come in the long term. Being a search company with an AI lake, Elastic has a big advantage over the competition with its Elasticsearch relevance engine. This will allow it to have strong growth through 2024 and into 2025, allowing for significant share appreciation. Cash flow continues to improve and the growth in RPO has outpaced revenue, leaving potential upside. While software has been very mixed in 2024 with winners and losers, ESTC has the potential to be a big winner for the second half of the year. The sector has shown recent weakness, with Salesforce earnings throwing cold water on the software equities. However, if you have a long-term outlook now is a great time to begin a position in Elastic....

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