Is Datadog, Inc. (DDOG) The Best Fast Growing AI Stock To Buy Right Now?
We recently compiled a list of the 8 Fastest Growing AI Stocks To Buy Right Now. In this article, we are going to take a look at where Datadog, Inc. (NASDAQ:DDOG) stands against the other high-growth AI stocks.
The rapid growth of artificial intelligence (AI) continues to reshape industries around the world, and experts are closely monitoring its trajectory. In December 2024, Roosevelt Bowman, Senior Investment Strategist at Bernstein Private Wealth Management joined 'Wealth' hosted by Yahoo Finance to share his insights on the AI landscape heading into 2025. Bowman predicts that AI will move beyond its current focus on semiconductors and cloud computing. He expects that it will expand into power infrastructure and cooling technologies, which play a crucial role in running large-scale AI models effectively.
Bowman also highlighted that AI models have tremendous power requirements of AI data centers. He emphasized the need for reliable energy sources to meet these demands and noted that this could lead to new market opportunities in sectors that support AI's operational needs.
READ ALSO: 10 Cheap Technology Stocks to Buy According to Hedge Funds and 10 Unrivaled Stocks of the Next 5 Years.
On February 28, 2025, Alex Zukin, managing director and head of software research at Wolfe Research joined Market Domination Overtime on Yahoo Finance to discuss the evolving role of AI in the software industry. Zukin noted that 2025 could be a pivotal year for software companies to unlock the real value of AI.
He pointed out that AI technology is moving extraordinarily quickly. Zukin expects this year to mark a turning point as companies start to implement AI solutions into production and unlock benefits. However, he cautioned the companies not to overpromise on artificial intelligence.
Zukin also told Yahoo Finance about the seasonality of the enterprise software market. The first quarter is typically difficult, but he expects growth to accelerate in the second half of 2025.
Beyond software, there is significant potential for AI to drive innovation across various industries.
To compile our list of the 8 fastest-growing AI stocks to buy right now, we looked for the largest and most popular AI companies. We reviewed Insider Monkey's database of prominent AI stocks, financial media reports, ETFs, and various online resources to compile a list of more than 30 AI stocks. To look for the fastest-growing AI stocks, we narrowed down our list to companies with a compound annual growth rate (CAGR) in revenue exceeding 10% over the past 3 years and a year-over-year revenue growth rate of more than 25%. Next, we focused on the top 8 fastest-growing AI stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey's Q4 2024 database of more than 1,000 elite hedge funds. Finally, the 8 fastest-growing AI stocks to buy right now were ranked in ascending order based on the number of hedge funds holding stakes in them, as of Q4 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a laptop with a software engineer coding on the monitor.
Year-Over-Year Revenue Growth Rate: 26.12%
3-Year Revenue CAGR: 37.67%
Number of Hedge Fund Holders: 83
Datadog, Inc. (NASDAQ:DDOG) is an American software company that provides a monitoring and security platform for cloud applications. The company's SaaS platform helps organizations of various sizes to integrate and automate infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security, and many other capabilities to provide unified, real-time observability and security. Datadog, Inc. (NASDAQ:DDOG) is one of the best high-growth stocks to buy.
On February 10, DA Davidson analysts updated the firm's price target on Datadog, Inc. (NASDAQ:DDOG) from $150 to $165 and maintained a 'Buy' rating. This decision follows an analysis of proprietary developer datasets showing healthy usage and stable demand for the company's services. The analysts are confident that Datadog, Inc. (NASDAQ:DDOG) can capitalize on current market opportunities, especially in helping customers observe large language models (LLMs). The firm's positive outlook is also supported by the company's recent acquisition of Quickwit. This move is expected to enhance Datadog, Inc.'s (NASDAQ:DDOG) AI software infrastructure offerings. DA Davidson's analysts believe that the company is positioned well to benefit from the ongoing shift from AI hardware to AI software infrastructure. Insights from the Developer Ecosystem Network and field checks show that Datadog, Inc. (NASDAQ:DDOG) is well-equipped to help customers manage AI-related workloads.
Overall, DDOG ranks 6th on our list of the fastest-growing AI stocks to buy right now. While we acknowledge the potential of DDOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DDOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
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