Elastic (ESTC) stock jumped 8% on Friday as the artificial intelligence (AI)-powered search company raised its revenue guidance and announced a $500 million share repurchase program during its Analyst Day event held yesterday. The company also announced the launch of a new service, the Elastic Inference Service (EIS), a graphics processing unit (GPU)-accelerated inference-as-a-service for Elasticsearch semantic search, vector search, and generative AI workflows.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The company highlighted that its EIS offering addresses the challenge of providing inference at scale, which is very crucial for vector search, semantic search, and generative AI workflows, by leveraging Nvidia’s (NVDA) GPUs.
Elastic Raises Revenue Guidance
Elastic raised its revenue guidance for the second quarter of Fiscal 2026 to the range of $417 million to $419 million from the previous outlook of $415 million to $417 million. Moreover, the company increased its full-year Fiscal 2026 revenue outlook to the range of $1.697 billion to $1.703 billion from its prior range of $1.679 billion to $1.689 billion.
The company cited improved revenue visibility into the demand environment as the reason for raising its guidance. Elastic expects to benefit from the massive generative AI opportunity. Meanwhile, the company also increased its Fiscal 2026 non-GAAP operating margin guidance by 0.25 points to 16.25%.
Elastic also announced the completion of its acquisition of Jina AI, a pioneer in open source multimodal and multilingual embeddings, reranker, and small language models.
ESTC Announces $500 Million Share Repurchase Plan
Elastic announced that its Board of Directors has approved a share repurchase program of up to $500 million. Notably, the repurchase program does not have an expiration date. The company added that it expects to use more than 50% of this authorized amount in Fiscal 2026.
Looking ahead, Elastic expects to return 50% of its free cash flow to shareholders through repurchases, unless more attractive acquisition opportunities arise that utilize its cash.
Is ESTC a Good Stock to Buy?
Currently, Wall Street has a Moderate Buy consensus rating on Elastic stock based on 17 Buys and eight Holds. The average ESTC stock price target of $117.76 indicates 44.4% upside potential from current levels.
