SAN FRANCISCO - Elastic (NYSE: NYSE:ESTC), known for its search AI technology, has integrated Google (NASDAQ:GOOGL) Cloud's Vertex (NASDAQ:VRTX) AI into its Elasticsearch Open Inference API and Playground, a move that allows developers to utilize text embedding and reranking models for building applications. This collaboration was announced today, making it easier for the Elastic community to leverage the combined strengths of Vertex AI and Elasticsearch for the development of generative AI and Retrieve and Generate (RAG) applications.
Warren Barkley, Senior Director of Product Management for Vertex AI at Google Cloud, expressed enthusiasm for the partnership, noting that the integration will empower developers to create transformative applications with the technology provided by both companies. Shay Banon, Founder and CTO of Elastic, echoed this sentiment, highlighting the potential of the unified AI development platform to spur innovation among Elastic developers.
The integration offers developers the ability to store embeddings and refine data retrieval processes, which can enhance the accuracy of generated content by grounding answers with proprietary data. Additionally, Google Cloud's Gemini models have been made available in Elastic's low-code playground, enabling developers to experiment with large language models (LLMs) and optimize their applications through A/B testing and other tuning methods.
Support for Vertex AI is accessible as of today, and interested developers are encouraged to review the Open Inference API and Playground blogs for guidance on how to begin using these new features.
Elastic's solutions, including those for search, observability, and security, are widely used by companies globally, with more than half of the Fortune 500 relying on the Elastic Search AI Platform. This latest integration with Vertex AI represents an ongoing effort to expand the capabilities of Elastic's technology and its accessibility to developers.
The information for this article is based on a press release statement.
In other recent news, Elastic has made significant strides in its operations and market positioning. The company announced that its Elastic Search AI Platform is now available within the AWS Marketplace for the U.S. Intelligence Community, enabling U.S. government agencies to harness the capabilities of search and AI for large-scale data processing. In addition, Elastic has entered into a distribution agreement with Arrow Electronics (NYSE:ARW), a move aimed at expanding its reach across North America and helping organizations transition from legacy systems.
Guggenheim initiated coverage on Elastic with a positive outlook, citing the company's GenAI potential and core search capabilities. The firm set a Buy rating on the stock, demonstrating confidence in Elastic's long-term growth opportunities within the GenAI market. On the other hand, Canaccord Genuity maintained its Buy rating on Elastic but reduced the price target to $110 from $125, citing near-term sales execution challenges and a cautious macroeconomic outlook.
DA Davidson also adjusted its stance on Elastic, reducing the price target to $75 while maintaining a Neutral rating, following lower-than-anticipated customer commitments. These developments underscore Elastic's ongoing efforts to innovate and adapt in the dynamic tech landscape, despite facing some challenges in executing its new customer engagement strategy.
InvestingPro Insights
Elastic's recent integration with Google Cloud's Vertex AI aligns well with its strong market position and financial performance. According to InvestingPro data, Elastic boasts a market capitalization of $8.03 billion, reflecting its significant presence in the AI and search technology sector.
The company's revenue growth is noteworthy, with an 18.72% increase over the last twelve months as of Q1 2025, reaching $1.32 billion. This growth trajectory supports Elastic's ability to invest in and expand its AI capabilities, as evidenced by the Vertex AI integration.
InvestingPro Tips highlight that Elastic holds more cash than debt on its balance sheet, indicating financial stability to support its technological advancements. Additionally, 20 analysts have revised their earnings upwards for the upcoming period, suggesting positive expectations for the company's performance following initiatives like the Vertex AI integration.
Despite a recent stock price decline, with a 26.53% drop over the past month, Elastic maintains a strong gross profit margin of 74.05%, demonstrating its ability to generate substantial returns from its core operations. This financial health positions the company well to continue innovating and expanding its AI offerings.
For investors seeking a deeper understanding of Elastic's potential, InvestingPro offers 10 additional tips, providing a comprehensive view of the company's financial landscape and market position.
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