Analysts lower forecasts for three software firms despite strong AI-driven bookings growth and customer adoption trends.
Morgan Stanley reduced its price targets for Elastic (ESTC), UiPath (PATH), and PagerDuty (PD) following their earnings reports. The adjustments reflect varying investor focus on AI-driven revenue durability across the sector, despite largely positive results.
Elastic’s bookings growth outpaced revenue, with current remaining performance obligations rising 20% to $1.2 billion and total RPO climbing 27% to $1.98 billion. Customers using AI capabilities in contracts over $100,000 increased to 1,720, while $1 million-plus deals hit a record. The firm maintained its Equal Weight rating on ESTC but cut its target to $73 from $80.
The report noted broad-based strength in Elastic’s search, security, and observability segments, though investor expectations remain cautious amid sector-wide AI adoption trends.