What are the company's expectations for AI‑driven product adoption and its impact on revenue?

Company outlook on AI‑driven product adoption

Elastic’s management is signalling that the “Search AI” platform will be the primary growth engine for FY 2026. In the upcoming earnings call they are expected to stress a accelerating adoption of AI‑enabled search and observability solutions across both existing enterprise customers and new verticals such as cybersecurity, cloud‑native monitoring, and generative‑AI workloads. The company’s guidance points to double‑digit YoY revenue growth (≈12‑15 % in the next 12 months) driven largely by higher‑margin, subscription‑based AI services and a expanding ecosystem of third‑party integrations. Management also highlighted that the AI‑centric product suite is now being cross‑sold to a broader base of existing customers, which should lift net‑new ARR and improve renewal rates.

Trading implications

If Elastic’s AI‑adoption narrative holds, the top‑line should out‑perform the broader software‑services sector, which is still pricing in modest growth. The stock is currently trading near its $70 – $75 resistance zone on the weekly chart, with a 50‑day moving average around $68 and a MACD turning bullish. A beat‑and‑raise on the AI‑driven revenue outlook could trigger a breakout toward the $80‑$85 range, offering upside for long‑biased traders. Conversely, any sign that AI uptake is slower than projected—evidenced by muted subscription growth or higher churn—could pressure the price back toward the $62‑$65 support band. Given the strong cash‑flow profile and expanding AI footprint, a moderate long position with a stop just below $68 (to protect against a pull‑back) aligns with the current fundamentals and technical set‑up.