Elastic’s Growth Potential Highlighted by Strong Q4 Performance and AI Initiatives Despite Short-Term Challenges

Morgan Stanley analyst Sanjit Singh maintained a Buy rating on Elastic (ESTC – Research Report) today and set a price target of $115.00.

Sanjit Singh has given his Buy rating due to a combination of factors that highlight Elastic’s potential for growth despite some short-term challenges. The company reported a solid fourth quarter, with revenue exceeding expectations by 2% and showing a year-over-year growth of 16% in constant currency. Although Elastic Cloud’s growth of 23% fell slightly short of market expectations, the overall performance was better than it initially appeared, especially when considering the normalization for days in the quarter.
Furthermore, Singh points out that Elastic’s AI initiatives are gaining traction across both cloud and self-managed businesses, with the self-managed segment showing acceleration. Subscription revenue, excluding smaller cloud customers, grew significantly, underscoring the strength of the core business. The AI Search segment remains particularly promising, with over 2,000 customers utilizing Elastic for generative AI use cases. Despite a conservative initial revenue outlook for FY26, Singh attributes this to the prudence of a new CFO rather than competitive or execution issues, reinforcing confidence in Elastic’s long-term growth trajectory.

Singh covers the Technology sector, focusing on stocks such as Appian, Domo, and Dynatrace. According to TipRanks, Singh has an average return of 0.6% and a 49.40% success rate on recommended stocks.

In another report released today, Barclays also maintained a Buy rating on the stock with a $105.00 price target.