2 AI Stocks That Gap and Crapped for a Dip Buying Opportunity

December 11, 2024 at 07:45 AM EST

April 04th 2024. The logo of NetApp on the screen of an exchange. NetApp price stocks, $NTAP on a device. — Stock Editorial Photography

The reaction to earnings reports can be fickle and illogical at times. Sometimes, the market will react one way and then completely reverse its sentiment. When a company beats top and bottom line estimates and raises guidance, the market is expected to push the stock higher, and vice versa when a company misses and guides lower. However, that's not always the case. Sometimes, the market gets it wrong, too, at least initially. Sometimes, a price "gap" can trigger profit takers causing its shares to "crap" back down. Here are two AI tech stocks in the computer and technology sector that gapped and crapped, presenting buying opportunities for bullish investors.

Elastic: AI-Powered SIEM, Search and Data Visualization for Enterprises

When companies need to enable search across various applications pertaining to their data, Elastic N.V. (NYSE: ESTC) is the data analytics provider chosen for brands like streaming giant Netflix Inc. (NASDAQ: NFLX), eBay Inc. (NASDAQ: EBAY), Uber Technologies Inc. (NYSE: UBER), Adobe Inc. (NASDAQ: ADBE) and Wells Fargo Inc. (NYSE: WFC). The artificial intelligence (AI) boom has also built a niche for Elastics as it enables enterprises to filter all sorts of data to determine which should be used for AI training. The company announced the Elastic AI Ecosystem for enterprise developers to accelerate constructing and deploying retrieval augmented generation (RAG) applications.

Crushing Top and Bottom-Line Estimates

Elastic reported fiscal Q2 2025 EPS of 59 cents, crushing consensus analyst estimates for 38 cents by 21 cents. GAAP operating loss was $4 million, and non-GAAP operating income was $64 million with a non-GAAP operating margin of 18%. Revenues rose 17.6% YoY to $365.36 million, firmly beating $354.29 consensus estimates. Elastic Cloud revenue rose 25% YoY to $169 million. Elastic closed the quarter with $1.2 billion in cash and cash equivalents.

Upside Guidance for FQ3 and Raised Fiscal Full Year 2025 Forecasts

Elastic issued upside FQ3 2025 EPS of 46 cents to 48 cents, versus 41 cents consensus estimates on revenue of $367 million to $369 million versus $366.04 million consensus estimates. For the fiscal full year 2025, Elastic sees EPS of $1.68 to $1.72, up from previous forecasts of $1.52 to $1.56), versus $1.53 consensus estimates.

Revenue expectations were raised to $1.451 billion to $1.457 billion, up from $1.436 billion to $1.444 billion, versus $1.44 billion consensus estimates.

Elastic shares gapped as high as $118.18 and crapped to $108.03 following its earnings report.

NetApp: Enabling Intelligence Data Infrastructure for Multi-Cloud Enterprises

Whether on-premise, public, or private cloud, NetApp Inc. (NASDAQ: NTAP) enables companies to maintain intelligent data infrastructure through its Hybrid Cloud and Public Cloud segments. The company has won more than 100 data lake modernization and AI contracts and expanded its partnerships with Amazon.com Inc. (NASDAQ: AMZN), AWS, and Alphabet Inc. (NASDAQ: GOOGL) Google Cloud. Founded in 1992, it’s one of the oldest mature IT firms benefitting from the AI boom.

Solid Growth for a Mature Tech Company

NetApp reported fiscal Q2 2025 EPS of $1.87, beating consensus estimates by 9 cents. Revenue rose 6.1% YoY to $1.66 billion, beating $1.65 billion analyst estimates. Billing rose 9% YoY to $1.59 billion. It recorded record all-flash array annualized net revenue run rate of $3.8 billion, up 19% YoY. First-party and marketplace cloud storage services revenue surged 43% YoY. NetApp closed the quarter with $2.22 billion in cash and cash equivalents.

Mixed Guidance: In-Line FQ3 2025 and Raised FY2025 EPS Forecasts

NetApp issued in-line FQ3 2025 EPS guidance of $1.85 to $1.94 versus $1.85 consensus estimates. Revenues are expected between $1.61 billion to $1.76 billion versus $1.68 billion.

Fiscal full-year 2025 EPS is expected to be between $7.20 and $7.40 versus $7.11 consensus estimates. Revenues are expected to be between $6.54 billion and $6.74 billion versus the consensus estimates of $6.6 billion.

NetApp shares gapped as high as $135.45 and crapped to $122.34 following its earnings report.

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