11:00 AM EDT, 10/07/2025 (MT Newswires) -- Elastic (ESTC) is well positioned to benefit from the growing Artificial Intelligence opportunity, RBC Capital Markets said ahead of the company's Oct. 9 user event and investor session, where the firm expects management to outline its long-term vision for search and AI.

The brokerage said in a Monday note that momentum around Elastic's AI initiatives continues to build, with about 2,200 customers using the platform for generative AI use cases, including 330 spending more than $100,000 annually.

The company also reported a record number of $1 million annual contract value cloud customers in Q1, exceeding the previous two quarters combined.

For the medium term, consensus estimates point to revenue of about $1.90 billion in fiscal 2027 and $2.14 billion in fiscal 2028, implying growth of roughly 12% to 13%. Profitability is expected to improve, with operating margins forecast at 17% to 18% and earnings per share of $2.64 and $3.03, respectively.

Analysts surveyed by FactSet expect revenue of $1.9 billion for 2027, $2.14 billion for 2028, and earnings per share estimates of $2.64 and $2.98 for 2027 and 2028, respectively.

RBC said it continues to view Elastic's positioning favorably, given its role in search and AI despite mixed investor sentiment.

The firm maintained an outperform rating and a $125 price target on the stock.

Shares of Elastic were down nearly 3% in recent trading.

Price: 81.75, Change: -2.29, Percent Change: -2.72