Snowflake (SNOW, Financials) and Elastic (ESTC, Financials) shares gained Monday after Wedbush Securities upgraded both software businesses, citing the next phase of AI usage.
Analyst Dan Ives at Wedbush raised Snowflake's price objective to $190 and Elastic's to $135, improving the firms from Neutral. Snowflake stock last closed at $171.61, and Elastic shares finished at $111.53.
“The stalwart cloud/hyper scale players have been another instrumental part of this first phase of the AI Revolution, being led by Microsoft and now also seeing Google and Amazon finding major cloud and AI momentum in the field,” Ives said in a note to clients. “Now [it's] time for the broader software space to get in on the AI Party as we believe the use cases are exploding, enterprise consumption phase is ahead of us beginning in 2025, launch of LLM models across the board, and the true adoption of generative AI will be a major catalyst for the software sector and key players to benefit from this once in a generation 4th Industrial Revolution set to benefit the tech space. The AI Software era is now here in our view.”
Snowflake is in the "sweet spot" according to Ives to help from AI use cases over the next 12 to 18 months. Elastic ought to gain from "growing AI demand for its platform approach," he said.
Both businesses recently released stronger-than-expected outlook in addition to quarterly results above expectations.
Citing similar hope for AI-driven expansion in the software industry, Wedbush also increased price estimates for Palantir Technologies (PLTR, Financials) to $75 from $57 and Salesforce (CRM, Financials) to $375 from $325.
