We recently published a list of 12 AI Stocks on Analysts’ Radar. In this article, we are going to take a look at where Elastic N.V. (NYSE:ESTC) stands against other AI stocks on analysts’ radar.
The recently imposed US sanctions on chip use have angered China. In recent news, the country has stated that it may take legal action against any individual or organization who are found assisting or implementing U.S. measures that advise companies against using their advanced semiconductors.
According to the U.S. published guidance, companies risk violating export controls if found using Ascend AI chips from Shenzhen-based Huawei. In response, China’s commerce ministry said there could be “corresponding legal liabilities” against those involved in implementing U.S. measures and that it constitutes “discriminatory restrictive measures” against Chinese firms.
READ ALSO: 10 AI Stocks Investors Are Watching Today and 15 AI Stocks Surging on News and Analyst Ratings.
The sanctions are seemingly a new strategy adopted by the US to curb China’s progress in the AI arms race. The world is yet to watch the success of this strategy as opposed to the AI diffusion rule imposed earlier, which the world came to know had failed miserably after the arrival of DeepSeek.
Even Jensen Huang has deemed the AI diffusion rule to be a failure.
“All in all, the export control was a failure. The fundamental assumptions that led to the AI diffusion rule in the beginning, in the first place, has been proven to be fundamentally flawed.”
In fact, the sales block advanced AI chips to China, forcing companies to buy semiconductors from Chinese designers. It also pushed the country to invest aggressively in a robust supply chain that doesn’t rely on manufacturers outside the country.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A group of software engineers working in an open, futuristic office.
Elastic N.V. (NYSE:ESTC)
Number of Hedge Fund Holders: 64
Elastic N.V. (NYSE:ESTC) is a search AI company offering cloud-based solutions. TD Cowen recently lowered the firm’s price target on the stock to $105 from $125 and kept a “Hold” rating on the shares. The firm holds a cautious outlook toward the stock ahead of its financial report scheduled for May 29. All eyes are going to be on the company’s guidance for FY26 on the said day.
While a 23% Cloud growth expectation is in line with estimates, FY26 guidance is anticipated to be slightly below the consensus estimate of 14%. This is because the forecast accounts for the recent CFO appointment and the current macroeconomic environment. As such, the upcoming earnings and guidance may prove to be a crucial test for investor confidence.
In other news, Elastic announced how Elasticsearch, its open-source, distributed search and analytics engine, has integrated with the new NVIDIA Enterprise AI Factory validated design. This collaboration strives to build and deploy on-premises AI factories.
“We are obsessed with building the best vector database in the market. NVIDIA Enterprise AI Factory validated designs enable Elastic customers to unlock faster, more relevant insights from their data.”
-Ken Exner, chief product officer at Elastic.
Overall, ESTC ranks 8th on our list of AI stocks on analysts’ radar. While we acknowledge the potential of ESTC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than ESTC and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
