Thill's Download: Bullish Compute Signals, Expert View on Data Cloud, ESTC RIF

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Thill's Download: Bullish Compute Signals, Expert View on Data Cloud, ESTC RIF

USA | Software EquityJuneResearch29, 2026

Thill's Download: Bullish Compute Signals,

Expert View on Data Cloud, ESTC RIF

Software continues to lag (IGV down ~1% this week) as capital continues to

flow to the compute supply chain (as shown in MU print). Our expert believes

AI disruption for software is more likely pricing pressure vs. displacement as

internal builds emerge in lighter use cases. We believe data layer upside is in

early innings driven by AI-led query growth, benefiting SNOW. See more inside

and watch the video below for an interactive download.

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Key takes from fireside chat with co-founder/CEO of TextQL: 1) Data cloud growth likely

capped by IT budget growth, with SNOW/Databricks outcome driven more by pricing than product

differentiation as CoCo/Genie converge. 2) LLM observability remains an unsolved whitespace, with

current tools feeling bolted-on vs. purpose-built for non-deterministic workflows. 3) Token spend

durability is uncertain amid modest productivity gains, concentrated spend, and brand-driven model

preference. 4) SaaS faces emerging pressure from internal builds that could disrupt pricing power

over time. See inside for more.

ESTC's 7% RIF supports path to high teens margins. Earlier this week, ESTC announced a 7%

RIF impacting roughly 280 employees, though mgmt plans to continue hiring in customer-facing

GTM functions and expects total headcount to grow in FY27E vs FY26. ESTC ended FY26 with

4,019 employees, having added 480 heads in FY26 (+14% y/y) and 350 in FY25 (+11% y/y). We

are constructive on these cost-efficiency actions given the pace of hiring over the past three years