7 Best Small Company Stocks To Invest In

3. Elastic NV (NYSE:ESTC)

Market Capitalization as of September 27: $7.93 billion

Number of Hedge Fund Holders: 58

Elastic NV (NYSE:ESTC) is an American-Dutch search company that builds self-managed and SaaS offerings for search, logging, security, observability, and analytics use cases, helping organizations discover, analyze, and act on their data. Its flagship product, Elasticsearch, is a highly scalable and distributed search engine that can be used to index and search large volumes of data in real time.

Revenue grew 18.27% year-over-year in FQ1 2025, with cloud revenue growing by 30%. The company’s customer base is expanding, with over 1,370 customers spending ~$100,000. Elastic is also capitalizing on generative AI opportunities to drive growth in its Search business.

Of the 1,300+ customers using Elastic Cloud for GenAI, over 200 are larger customers. It has introduced a new incentive program called Elastic Express Migration to streamline the transition to the Elasticsearch AI platform. This program offers comprehensive migration services, helping companies avoid the costs of working with multiple vendors.

It’s also a prominent player in the 5G sector due to its powerful data analytics and search capabilities. Its Elastic Stack is a key product, enabling organizations to effectively manage and analyze the vast amounts of data generated by 5G networks. Elastic Security, another key offering, provides comprehensive security solutions, including SIEM, SOAR, and endpoint protection.

The recent reorganization of the sales team to focus on larger customers caused temporary delays in closing deals, especially in the Americas and EMEA. However, management expects most of these deals to close soon. Despite the challenges, the recent deals and partnerships demonstrate the company’s ability to adapt to customer needs and capitalize on the growing demand for AI-driven solutions, positioning it for success.

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.”