Excitement about artificial intelligence (AI) and its potential to boost labor productivity has sent many stocks higher this year. Shares of CrowdStrike Holdings (CRWD 2.03%) and Elastic (ESTC 2.52%) have more than doubled, climbing 127% and 119%, respectively.

Even so, both stocks bear a consensus rating of buy among Wall Street analysts, and neither has a single sell recommendation at the present time. Read on to learn more about these highly recommended AI growth stocks.

CrowdStrike Holdings: 127% year-to-date return

CrowdStrike sells cybersecurity software. Its Falcon platform leans on artificial intelligence (AI) to protect data, identities, and workloads across devices in public clouds and private data centers. Falcon includes more than two dozen modules that span multiple large markets, and CrowdStrike is a recognized leader in many of them, including endpoint security, cloud native application protection, and threat intelligence.

Leadership in threat intelligence is particularly noteworthy because it points to superior AI, simply because data is the foundation of machine learning. CEO George Kurtz said as much on the most recent earnings call: "Our AI trained on cybersecurity's richest dataset drives the industry's most comprehensive protection and automation."

CrowdStrike reported solid results in the third quarter, though economic uncertainty continued to drag on customer spending. The company said its net retention rate was slightly below its benchmark of 120%, meaning the average customer spent a little less than 20% more.

Yet revenue still rose 35% to $786 million and non-GAAP (adjusted) net income doubled to $199 million. Investors should expect a similar sales growth trajectory in the future.

Management is targeting $10 billion in annual recurring revenue in the next five to seven years, implying annual growth ranging from 19% to 28% in the interim. But some analysts think that estimate is conservative. Malik Ahmed Khan of Morningstar expects CrowdStrike to grow revenue at 31% annually over the next five years.

In any case, those forecasts make its current valuation of 20.2 times sales seem reasonable, and that multiple is certainly a discount to the three-year average of 30.6 times sales. Patient investors who can withstand volatility should consider buying a small position in this stock today, provided they are willing to hold their shares for at least five years.

Elastic: 119% year-to-date return

Elastic is a data analytics company. Its Elastic stack platform can ingest and sort machine data, then analyze and draw insights from the information with help from AI. Developers can use the Elastic stack to build custom software, but the company also sells three prebuilt applications: enterprise search, security, and observability.

Elastic is the most popular workplace search engine on the market, according to DB-Engines. That advantage lends itself to a land-and-expand growth strategy. In other words, Elastic should be able to engage customers with its enterprise search product, then cross-sell those customers with its security and observability products.

Elastic impressed Wall Street with its financial performance in the second quarter of fiscal 2024 (ended Oct. 31), so much so that the stock soared 37% following the report. The company increased its customer count by 5%, and the average customer spent about 10% more. In turn, sales climbed 17% to $311 million and non-GAAP net income was $38 million, up from breakeven in the prior year.

Management attributed some of the second-quarter momentum to success with generative AI tools like Elasticsearch Relevance Engine, a product that helps businesses build AI-enabled search applications.

Going forward, Elastic is well positioned to capitalize on growing demand for AI given that its platform stores and indexes data, and CEO Ash Kulkarni said as much on the earnings call: "We view generative AI as a massive tailwind that will continue to benefit our business in the years to come."

Elastic values its addressable market at $88 billion this year, leaving a long runway for expansion, though its security and observability products face tough competition from companies like CrowdStrike and Datadog. Even so, analysts at Morningstar think Elastic can grow revenue at 19% annually over the next five years. If accurate, its current valuation of 9.8 times sales may seem like a bargain in hindsight.

However, one metric gives me pause: customer growth. As mentioned, Elastic reported a 5% increase in customers in the most recent quarter, a meaningful deceleration from 16% growth in the prior year. That slowdown may be a product of the macroeconomic environment, but I would personally wait for customer growth to reaccelerate before buying this stock.