Elastic's $88B TAM in Search, Observability and Security Market And Offers 30–60% Lower TCO

In our recent deep-dive, we highlighted that many investors are eager to understand Elastic’s offering in greater detail. Elastic is back in the spotlight because its search-first architecture now underpins high-growth arenas like GenAI retrieval, vector search, and hybrid observability-security stacks

In a recent Elastic’s earning call, CEO described an eight-figure expansion deal with a global financial institution and a multi-year seven-figure expansion with an international banking group.

"We expect total revenue in the range of $1.655 billion to $1.67 billion. Representing 12% year-over-year growth at the midpoint or 11% year-over-year constant currency growth at the midpoint."

"We announced a new five-year strategic collaboration agreement with AWS, which deepens our partnership through solution integrations, joint go-to-market, and marketing initiatives."

Given Elastic's expanding role across full-text, semantic, and operational search layers, investors are conducting a targeted set of diligence conversations to better understand how the platform is being adopted in practice — including areas where it displaces incumbents or complements cloud-native data services.

Elastic operates at the intersection of several high-growth segments — including enterprise search, log analytics, observability, and increasingly, vector search and RAG architectures.

The global enterprise search market is expected to grow at a CAGR of ~10–13% through 2030, with adjacent markets like observability and vector search expanding even faster. As spending shifts from batch-oriented data lakes to real-time and AI-native systems, Elastic’s open-source foundation, scalable architecture, and recent investments in semantic search make it a strategic asset under evaluation by both technical teams and procurement stakeholders.

Many of our clients have expressed heightened interest in Elastic’s Application Search business, so this article concentrates primarily on that segment. We’ll also provide a brief overview of Elastic’s competitors in security and observability.

Let’s start with the questions from clients:

1. Why is Elastic popular and which market segments does it most effectively address?

2. Elastic’s competitive positioning in Application Search, Observability and Security

   1. How does Elastic’s App Search Business compare against competitors such as OpenSearch, Glean, and Coveo?

      1. TCO high level cost model with Baseline and Active Analysis scenario between Elastic and OpenSearch

3. When choosing a storage and search solution for Generative AI and “Agentic AI” workflows, what several factors come into play?

4. With a shift underway from GenAI interfaces to more autonomous, agent-As enterprise data stacks adapt for generative-AI and agent-based workloads, how well is Elastic positioned to capture this opportunity, and what specific factors support that assessment?

5. Did Elastic “reverse” its 2021 license switch? What are the impacts? Does this spill into Observability and Security?

6. Self-hosting and open-source drift ― why it’s a real risk for Elastic?

Please note: The insights presented in this article are derived from confidential consultations our team has conducted with clients across private equity, hedge funds, startups, and investment banks, facilitated through specialized expert networks. Due to our agreements with these networks, we cannot reveal specific names from these discussions. Therefore, we offer a summarized version of these insights, ensuring valuable content while upholding our confidentiality commitments.