1. Elastic NV (NYSE:ESTC)
Market Capitalization as of September 11: $7.41 billion
Number of Hedge Fund Holders: 58
Elastic NV (NYSE:ESTC) is an American-Dutch search and analytics solutions company that builds self-managed and SaaS offerings for search, logging, security, observability, and analytics use cases. Its technology is used by organizations in various industries, including IT, security, and e-commerce, to gain insights from their data through searching, analyzing, and visualizing data at scale.
Recently, the company changed how it organizes the sales team to focus more on larger customers, which caused delays in closing deals, especially in the Americas. Customer budget constraints also slowed down deals in EMEA. However, no deals were lost and most of them are expected to close soon.
Despite these challenges, the company had a strong first quarter of fiscal 2025, with revenue growth of 18% and cloud revenue growth of 30% year-over-year. The total revenue generated in the period was $347.42 million, with $0.35 in earnings per share. It has over 1,370 customers spending ~$100,000. Elastic NV (NYSE:ESTC) is also focusing on GenAI opportunities, which is helping the Search business grow.
Over 1,300 customers are using Elastic Cloud for GenAI, and more than 200 of these are larger customers. It recently launched a new incentive program called Elastic Express Migration to help companies move to the Elasticsearch AI platform quickly and efficiently. This program includes all the necessary migration services and helps companies avoid the costs of using multiple vendors.
58 hedge funds are long in Elastic NV (NYSE:ESTC) with a total of 1,690,700 shares. The highest stake is at $192,587,637 by Tiger Global Management LLC. The company’s recent deals and partnerships demonstrate its ability to meet the evolving needs of its customers and capitalize on the growing demand for AI-driven solutions.
Artisan Global Discovery Fund stated the following regarding Elastic N.V. (NYSE:ESTC) in its Q2 2024 investor letter:
“During the quarter, we initiated new GardenSM positions in Liberty Formula One, Elastic N.V. (NYSE:ESTC) and Onto Innovation. Elastic is a software company that specializes in search and data analysis solutions. Elastic’s search, observability and security solutions are built on the Elastic Search AI Platform, which thousands of companies use, including more than 50% of the Fortune 500. Customers use the software to gain visibility into their data, reduce mean-time-to-resolution and drive actionable outcomes. We believe the company will benefit from the rise of generative artificial intelligence (AI). It provides a differentiated offering due to the combination of a unique pricing model based on consumption, products that handle numerous data types and volumes, and an open architecture environment that offers generative AI development flexibility.”
While we acknowledge the growth potential of Elastic NV (NYSE:ESTC), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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