This little-known software maker can rally nearly 30% as it monetizes AI, Bank of America says


Bank of America believes that elastic is well positioned to take advantage of the AI-driven craze sweeping Wall Street. Koji Ikeda, an analyst at Bank of America, reiterated his Buy rating and $78 target price for the software maker after Thursday’s strong fiscal first quarter print. He cited growing AI monetization possibilities. In a note published on Friday, he said that Elastic was likely to be establishing itself in the market as a strategic and differentiated vendor of generative AI. This should allow it to achieve sustainable growth in the future with increasing margins. Elastic stock has risen more than 20% in the past year. Bank of America’s target price implies a 26% increase from Thursday’s closing. Stocks jumped nearly 16% just before the bell rang after Elastic’s fiscal first quarter results were announced, which showed a 24% increase in cloud revenue year-over-year. ESTC YTD Elastic shares mountain year to date Positive comments on deal activity, and the fact that hundreds of customers have already used Elastic’s AI-focused products are boosting Ikeda’s belief in Elastic. He anticipates a rapid acceleration of Elastic’s revenue growth in the second half 2024 fiscal year. He said that the company’s growth will be above the software industry average for the foreseeable. Michael Bloom, a CNBC reporter, contributed to this report.