Elastic N.V. (NYSE:ESTC) is one of the AI Stocks Analysts Say You Shouldn’t Ignore. On August 25, BofA Securities analyst Koji Ikeda lowered the price target on the stock to $96.00 (from $104.00) while maintaining a Neutral rating. The price target adjustment largely stems from heightened competitive risks, particularly in AI workloads.
The firm discussed three points related to Elastic’s results:
“Three points into results: (1) Elevated scrutiny on the predictability of paid open-source models. (2) Elastic’s participation in the AI theme. (3) FY26 revenue growth guidance. ESTC shares are trading at a 22% discount multiple to infrastructure software peers (i.e., 4.5x CY26E revenue vs. 5.8x peers). However, we believe the risk/reward is balanced, as recent checks suggest competition for AI workloads is increasing. This could weigh on Elastic’s revenue growth. We believe the key metric is subscription revenue excluding monthly customers, where if growth accelerates to 20%+ y/y, from +19.3% last quarter, it could be a catalyst. Reiterate Neutral, lower PO to $96 (from $104) on higher competitive risks. PO now based on 5.3x EV/CY26E revenue (was 5.9x) vs peers at 5.8x.”
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Elastic N.V. is a search AI company offering cloud-based solutions.
While we acknowledge the potential of ESTC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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