What Happened?
Shares of search AI platform provider Elastic (NYSE: ESTC) jumped 2.1% in the morning session after the company highlighted strong growth in its search business, driven by artificial intelligence, during a presentation at Citi's 2025 Global Technology, Media and Telecommunications Conference.
During the event, a company executive noted that search has become the fastest-growing part of Elastic's business. This acceleration is attributed to the significant tailwinds from AI. The executive also mentioned that the advancements in their search capabilities are enhancing their competitive standing in the observability and security markets. Investors appear to have reacted positively to the commentary, which suggests that the adoption of AI is directly benefiting the company's core operations and growth trajectory.
After the initial pop the shares cooled down to $86.05, up 1.6% from previous close.
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What Is The Market Telling Us
Elastic’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 3.6% on the news that it reversed sharp pre-market gains despite the company posting second-quarter results that beat analyst expectations. The search and AI platform provider reported revenue of $415.3 million, up 19.5% year-over-year, and an adjusted EPS of $0.60, both of which topped Wall Street's estimates. Following the strong results, the stock initially surged nearly 17% in after-hours trading. However, the gains were short-lived as investors focused on the company's mixed guidance. While Elastic raised its outlook for the full year, its earnings per share forecast for the upcoming third quarter missed analysts' expectations. This weaker near-term profit outlook appeared to overshadow the strong quarterly performance, prompting a sell-off during regular trading hours.
Elastic is down 13.2% since the beginning of the year, and at $86.05 per share, it is trading 26.9% below its 52-week high of $117.76 from February 2025. Investors who bought $1,000 worth of Elastic’s shares 5 years ago would now be looking at an investment worth $862.40.
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