15 Best Growth Stocks to Buy for the Next 5 Years

12. Elastic NV (NYSE:ESTC)

Number of Hedge Fund Holders: 47

5-Year Revenue CAGR: 32.08%

Upside Potential as of January 15: 32.70%

Elastic NV (NYSE:ESTC) is an AI-powered search company that provides cloud-based solutions for data search, analysis, and visualization. Its platform helps businesses effectively manage structured and unstructured data across diverse environments.

In FQ2 2025, the company’s total revenue increased by 18% year-over-year. This was driven by the increasing demand for its Elastic Search AI Platform, which helps businesses extract valuable insights from their data using powerful search and AI/ML tools. It’s available both as a cloud service and for companies to manage themselves. It allows users to securely store and access huge amounts of data, easily find patterns, and gain valuable insights. The platform also includes an easy-to-use interface with tools for visualizing data.

Elastic Cloud, the company’s cloud-based offering, demonstrated a 25% year-over-year revenue increase in FQ2. This reflects the growing reliance of businesses on cloud technologies and the increasing demand for scalable and on-demand access to data and analytics solutions, including those powered by GenAI. As digital transformation continues to accelerate, Elastic NV (NYSE:ESTC) recognizes the need for organizations to integrate search and AI/ML capabilities across their entire operations.

On 16 December 2024, Morgan Stanley initiated coverage on the company with an Overweight rating and a $130 price target due to the growing adoption of GenAI by enterprises. Subsequently, on 21 December 2024, Morgan Stanley highlighted the company as a key beneficiary of GenAI momentum again. Artisan Global Discovery Fund initiated a new position in the company recently, due to trust in its its search and AI solutions, which position it well for the rise of GenAI. It stated the following regarding Elastic NV (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.”