Group 1 - The article emphasizes the need for portfolio rotation to mitigate potential downside risks in the S&P 500 amid bearish sentiment in the AI sector [1] - It suggests focusing on "growth at a reasonable price" as a strategy for investors [1] - The author, Gary Alexander, has extensive experience in technology companies and has been a contributor to Seeking Alpha since 2017, indicating a strong background in the industry [1]

Amid the resounding bearishness that is upending the AI trade, investors should look to portfolio rotation to protect themselves from possible further downside in the S&P 500. In my view, the best way to achieve this is to emphasize “growth at a reasonable price” inWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today ...

Group 1 - Google A shares increased by 2.3% following the release of its new AI image generation model, Nano Banana Pro [1] - Elastic's shares fell by 12.6% as its Q2 financial report indicated a slowdown in cloud business growth [1] - AnaptysBio's shares dropped by 11.1% due to a lawsuit filed against it by Tesaro, a subsidiary of GlaxoSmithKline [1] Group 2 - Bilibili's shares rose by 1.2% as institutional investors continued to express positive outlooks following its earnings report [1]

Group 1: Elastic NV Performance - Elastic NV reported second-quarter adjusted earnings of 64 cents per share, exceeding the analyst estimate of 58 cents [1] - The company's quarterly revenue was $423.48 million, surpassing the Street estimate of $418.16 million [1] - Despite the positive earnings and revenue results, Elastic shares fell 12.3% to $72.02 in pre-market trading [1] Group 2: Other Stocks in Pre-Market Trading - Luda Technology Group Ltd experienced an 11.1% decline to $8.55 after a 39% gain on Thursday [4] - AnaptysBio Inc fell 9.7% to $34.00 following the announcement of a $100 million stock repurchase plan [4] - Sigma Lithium Corp decreased by 8.4% to $8.61 after a 9% decline on Thursday [4] - Veeva Systems Inc saw a 6.7% drop to $252.40 despite posting upbeat third-quarter results and raising fiscal year earnings and revenue estimates [4] - American Bitcoin Corp declined 6.3% to $4.29 in pre-market trading [4] - Standard Lithium Ltd fell 6.3% to $3.60 [4] - Indivior PLC declined 5.9% to $29.90 after settling a matter with the U.S. Department of Justice for $295 million [4] - HIVE Digital Technologies Ltd dropped 5.8% to $2.75 after filing for mixed shelf [4] - Albemarle Corp fell 5.5% to $109.99 [4] - Oncology Institute Inc decreased by 2.1% to $3.17 [4]

Core Insights - Elastic N.V. reported strong second-quarter earnings, with adjusted earnings of 64 cents per share, surpassing the analyst estimate of 58 cents, and quarterly revenue of $423.48 million, exceeding the Street estimate of $418.16 million [1][2] Financial Performance - The company experienced robust growth across all metrics in Q2, with AI positively impacting various areas of the business [2] - Elastic raised its fiscal 2026 adjusted EPS guidance to a range of $2.40 to $2.46, compared to the previous estimate of $2.36, and increased its revenue guidance to a range of $1.715 billion to $1.721 billion, up from the prior estimate of $1.7 billion [2] Market Reaction - Following the earnings announcement, Elastic shares fell by 12.2% to $72.10 in pre-market trading [3] - Analysts adjusted their price targets for Elastic, with Stifel maintaining a Buy rating but lowering the target from $134 to $108, while B of A Securities maintained a Neutral rating and reduced the target from $111 to $90 [5]

Core Insights - Elastic N.V. reported strong second-quarter earnings, with adjusted earnings of 64 cents per share, surpassing the analyst estimate of 58 cents, and quarterly revenue of $423.48 million, exceeding the Street estimate of $418.16 million [1][2] Financial Performance - The company experienced robust growth across all metrics in Q2, with AI positively impacting various areas of the business [2] - Elastic raised its fiscal 2026 adjusted EPS guidance to a range of $2.40 to $2.46, compared to the previous estimate of $2.36, and increased its revenue guidance to a range of $1.715 billion to $1.721 billion, up from the $1.7 billion estimate [2] Market Reaction - Following the earnings announcement, Elastic shares fell by 12.2% to $72.10 in pre-market trading [3] - Analysts adjusted their price targets for Elastic, with Stifel maintaining a Buy rating but lowering the target from $134 to $108, while B of A Securities maintained a Neutral rating and reduced the target from $111 to $90 [5]

Market Overview - U.S. stock futures showed volatility with mixed performance after a significant sell-off on Thursday, with the S&P 500 index dropping below the support line of 6,550 and its 50-day moving average for the first time in months [1][2] - The September job report revealed non-farm payrolls increased by 119,000, exceeding economists' expectations of 50,000, impacting market expectations for interest rate cuts [2] Futures Performance - Dow Jones futures increased by 0.28%, while S&P 500 and Nasdaq 100 futures decreased by 0.14% and 0.47%, respectively [3] - The SPDR S&P 500 ETF Trust (SPY) fell by 0.35% to $650.25, and the Invesco QQQ Trust ETF (QQQ) declined by 0.77% to $581.15 in premarket trading [3] Stocks in Focus - New Fortress Energy Inc. surged by 19.86% due to debt restructuring efforts, while Gap Inc. rose by 3.86% after positive third-quarter results and an increase in FY25 sales guidance [4][5] - Veeva Systems Inc. dropped by 6.69% despite strong quarterly results and raised fiscal year estimates, while Elastic NV fell by 12.21% despite a solid earnings beat and strong guidance [4][5] Analyst Insights - Scott Wren from Wells Fargo Investment Institute maintains a bullish outlook for the equity market through 2026, forecasting an accelerating economy driven by deregulation and expected Federal Reserve rate cuts [10][11] - Wren advises reallocating investments from fully valued technology sectors into Financials and Industrials, which are expected to benefit from AI infrastructure growth [12] Upcoming Economic Data - Investors are anticipating key economic data releases, including November's S&P flash U.S. services and manufacturing PMI and final consumer sentiment data [15]

Core Points - The article discusses the importance of enabling Javascript and cookies in browsers to avoid access issues [1] - It highlights that ad-blockers may prevent users from proceeding to the desired content [1] Summary by Category - **Technical Requirements** - Users are advised to enable Javascript and cookies in their browsers to ensure proper functionality [1] - The presence of ad-blockers can lead to access restrictions, necessitating their temporary disablement [1]

Core Insights - Elastic (ESTC) reported quarterly earnings of $0.64 per share, exceeding the Zacks Consensus Estimate of $0.58 per share, and showing an increase from $0.59 per share a year ago, resulting in an earnings surprise of +10.34% [1] - The company achieved revenues of $423.48 million for the quarter ended October 2025, surpassing the Zacks Consensus Estimate by 1.28% and up from $365.36 million year-over-year [2] - Elastic has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise for the previous quarter was +42.86%, with actual earnings of $0.60 per share compared to an expected $0.42 [1] - The current consensus EPS estimate for the upcoming quarter is $0.59, with projected revenues of $429.34 million, and for the current fiscal year, the EPS estimate is $2.34 on revenues of $1.7 billion [7] Stock Performance and Outlook - Elastic shares have declined approximately 10.9% year-to-date, contrasting with the S&P 500's gain of 12.9% [3] - The company's Zacks Rank is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Internet - Software industry, to which Elastic belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company reported total revenue of $423 million for Q2, representing a growth of 16% year-over-year and 15% on a constant currency basis [24] - Sales-led subscription revenue was $349 million, growing 18% as reported and 17% on a constant currency basis [24] - The current remaining performance obligation (CRPO) was approximately $971 million, growing 17% as reported and 15% in constant currency [25] - Subscription gross margins were 82%, total gross margins were 78%, and operating margin was 16.5% [28] - Adjusted free cash flow was approximately $26 million, representing a margin of 6% [29] Business Line Data and Key Metrics Changes - The company saw strong execution in sales-led subscription revenue, with a notable increase in large commitments, including over 30 commitments greater than $1 million in annual contract value [24][26] - The number of customers spending over $100,000 annually grew to more than 1,600, with 23% of this cohort utilizing Elastic for GenAI use cases, up from 17% a year ago [27][33] Market Data and Key Metrics Changes - The company experienced broad-based demand across all geographies, supported by healthy consumption trends [23] - Despite a government shutdown impacting some renewals, the company closed significant deals, including a $26 million commitment with CISA [26][29] Company Strategy and Development Direction - The company is focused on leveraging its AI capabilities across all business areas, with a strong emphasis on security and observability [6][10] - The introduction of new products like Agent Builder aims to enhance the company's offerings in AI and context engineering [15][19] - The company is committed to innovation and strategic acquisitions, such as the acquisition of Jina AI, to strengthen its position in the AI and search markets [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong consumption and commitment trends [23][38] - The company raised its full fiscal year 2026 revenue guidance, expecting total revenue in the range of $1.715 billion to $1.721 billion, representing approximately 16% growth at the midpoint [32] - Management highlighted the importance of both cloud and self-managed environments in driving sales-led subscription revenue [30][31] Other Important Information - The company plans to return approximately $500 million to shareholders through a share repurchase program, having already returned $114 million in Q2 [29] - The company will participate in upcoming conferences, including the Barclays Global Technology Conference and the Needham Growth Conference [5] Q&A Session Summary Question: Performance of non-AI-native customers - Management noted strong consumption trends across all customer segments, including traditional businesses, driven by increased commitments and consolidation onto the platform [36][38] Question: Billings lagging behind other metrics - Management explained that seasonality and a government shutdown impacted billings, but overall commitments and consumption remained strong [40][42] Question: Composition of sales-led subscription revenue guidance - Management clarified that the guidance reflects commitments from both cloud and self-managed environments, with expectations for flat growth in the self-serve segment [49][50] Question: Growth opportunities outside of RAG - Management emphasized that relevance and context engineering are core strengths, and new products like Agent Builder will help monetize these capabilities [66] Question: Competitive landscape in security - Management indicated that the company is successfully displacing incumbents in the security space, leveraging its data platform and AI capabilities [85][90]