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Yahoo
12-05-2025
- Business
- Yahoo
3 Reasons Datadog Stock Is Still a Top Artificial Intelligence Buy Right Now
Datadog reported first-quarter earnings that exceeded Wall Street expectations. The company's new artificial intelligence-powered cloud monitoring and observability features are generating strong growth. Datadog's significant opportunity within the rapidly expanding cloud services market supports a bullish outlook for the stock. 10 stocks we like better than Datadog › For Datadog (NASDAQ: DDOG) shareholders, the past few years must have felt like treading water. The volatile stock shed approximately 38% from its 52-week high at the time of writing and is nowat levels first reached back in 2020. This frustrating performance stands in contrast to the impressive growth momentum from the cloud-computing leader in observability and monitoring. The company is capitalizing on strong demand for solutions that address the increasingly complex data demands generated by artificial intelligence (AI) applications. Several trends support a positive long-term outlook. Here are three reasons Datadog stock is still a top AI stock to buy right now. The Datadog platform acts as a central data hub for organizations, providing real-time visibility across their entire technology stack, including key cloud performance metrics, analytics, security, and system bottlenecks. Its unified approach uses integrates data from more than 900 software applications to identify problems and increase efficiency. New data-intensive AI workflows add to the need for comprehensive observability, representing a major growth driver. Datadog isn't just benefiting from the rise of AI -- it actively integrates AI tools into its platform, including through its Bits AI generative AI assistant. Solutions enhancing automation and intelligent analysis further bolster the company's value proposition for its customers. According to estimates from the industry research group Gartner, the public cloud services market is currently valued at $600 billion and is projected to nearly double in the coming years, with a 20% compound annual growth rate (CAGR) through 2028. Moreover, companies are allocating an increasing percentage of their total IT spending to the cloud. This significant tailwind underscores the substantial opportunity for Datadog and its attractiveness as an investment. In the recently reported first quarter, revenue grew by 25% year over year to $762 million, surpassing Wall Street's expectation of $741.5 million. Similarly, adjusted earnings per share (EPS) of $0.46 came in above the $0.43 market estimate. Datadog has approximately 30,500 customers, including 3,770 that each generate more than $100,000 in annual recurring revenue (ARR) in software-as-a-service subscriptions. Perhaps the most encouraging metric is the 110% dollar-based net retention rate over the past year, as the company's customer base increases spending on the platform by adopting additional products. Strong demand for AI solutions is a key part of the growth story. The number of customers using its large language model (LLM) Observability product more than doubled in just the past six months. Datadog continues to strengthen its platform through strategic bolt-on acquisitions, including Metaplane, an AI-powered data observability specialist acquired in April, and Eppo, an AI experimentation platform purchased just this month. These deals enhance Datadog's reach in data monitoring and real-time AI analytics, boosting its competitive edge. For the full year 2025, Datadog targets revenue between $3.215 billion and $3.235 billion, reflecting a robust 20% to 21% growth rate from the prior year. While ongoing investments in research and development, particularly in AI capabilities, create some operating margin pressure, EPS estimates of $1.67 to $1.71 for the year demonstrate strong underlying profitability. Even more encouraging is the free-cash-flow trend, which reached $833 million over the past year, surging 39% from year-end 2023. This dynamic supports the stock's premium valuation. Datadog shares trade at a forward price-to-earnings (P/E) ratio of 64 -- high compared to the broader stock market, but still attractive relative to other high-growth software infrastructure peers. Compared to stocks like CrowdStrike, Cloudflare, Zscaler, CyberArk Software, and SentinelOne, which collectively average a forward P/E above 100, Datadog stands out with its unique blend of observability and cybersecurity capabilities, offering broader organizational use cases than pure-play cybersecurity companies. Investors who believe Datadog is just beginning to realize its potential have compelling reasons to buy and hold the stock for the long run. Datadog's AI-fueled growth captures high-level themes, technology, and cloud computing to complement diversified portfolios. I'm bullish and expect shares to be trading at a higher price by this time next year. Before you buy stock in Datadog, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Datadog wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 5, 2025 Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cloudflare, CrowdStrike, Datadog, and Zscaler. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy. 3 Reasons Datadog Stock Is Still a Top Artificial Intelligence Buy Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
11-05-2025
- Business
- Globe and Mail
3 Reasons Datadog Stock Is Still a Top Artificial Intelligence Buy Right Now
For Datadog (NASDAQ: DDOG) shareholders, the past few years must have felt like treading water. The volatile stock shed approximately 38% from its 52-week high at the time of writing and is nowat levels first reached back in 2020. This frustrating performance stands in contrast to the impressive growth momentum from the cloud-computing leader in observability and monitoring. The company is capitalizing on strong demand for solutions that address the increasingly complex data demands generated by artificial intelligence (AI) applications. Several trends support a positive long-term outlook. Here are three reasons Datadog stock is still a top AI stock to buy right now. 1. AI-powered growth opportunity The Datadog platform acts as a central data hub for organizations, providing real-time visibility across their entire technology stack, including key cloud performance metrics, analytics, security, and system bottlenecks. Its unified approach uses integrates data from more than 900 software applications to identify problems and increase efficiency. New data-intensive AI workflows add to the need for comprehensive observability, representing a major growth driver. Datadog isn't just benefiting from the rise of AI -- it actively integrates AI tools into its platform, including through its Bits AI generative AI assistant. Solutions enhancing automation and intelligent analysis further bolster the company's value proposition for its customers. According to estimates from the industry research group Gartner, the public cloud services market is currently valued at $600 billion and is projected to nearly double in the coming years, with a 20% compound annual growth rate (CAGR) through 2028. Moreover, companies are allocating an increasing percentage of their total IT spending to the cloud. This significant tailwind underscores the substantial opportunity for Datadog and its attractiveness as an investment. 2. Robust operating tailwinds In the recently reported first quarter, revenue grew by 25% year over year to $762 million, surpassing Wall Street's expectation of $741.5 million. Similarly, adjusted earnings per share (EPS) of $0.46 came in above the $0.43 market estimate. Datadog has approximately 30,500 customers, including 3,770 that each generate more than $100,000 in annual recurring revenue (ARR) in software-as-a-service subscriptions. Perhaps the most encouraging metric is the 110% dollar-based net retention rate over the past year, as the company's customer base increases spending on the platform by adopting additional products. Strong demand for AI solutions is a key part of the growth story. The number of customers using its large language model (LLM) Observability product more than doubled in just the past six months. Datadog continues to strengthen its platform through strategic bolt-on acquisitions, including Metaplane, an AI-powered data observability specialist acquired in April, and Eppo, an AI experimentation platform purchased just this month. These deals enhance Datadog's reach in data monitoring and real-time AI analytics, boosting its competitive edge. 3. Free-cash-flow momentum For the full year 2025, Datadog targets revenue between $3.215 billion and $3.235 billion, reflecting a robust 20% to 21% growth rate from the prior year. While ongoing investments in research and development, particularly in AI capabilities, create some operating margin pressure, EPS estimates of $1.67 to $1.71 for the year demonstrate strong underlying profitability. Even more encouraging is the free-cash-flow trend, which reached $833 million over the past year, surging 39% from year-end 2023. This dynamic supports the stock's premium valuation. Datadog shares trade at a forward price-to-earnings (P/E) ratio of 64 -- high compared to the broader stock market, but still attractive relative to other high-growth software infrastructure peers. Compared to stocks like CrowdStrike, Cloudflare, Zscaler, CyberArk Software, and SentinelOne, which collectively average a forward P/E above 100, Datadog stands out with its unique blend of observability and cybersecurity capabilities, offering broader organizational use cases than pure-play cybersecurity companies. Investors who believe Datadog is just beginning to realize its potential have compelling reasons to buy and hold the stock for the long run. DDOG PE Ratio (Forward) data by YCharts Final thoughts Datadog's AI-fueled growth captures high-level themes, technology, and cloud computing to complement diversified portfolios. I'm bullish and expect shares to be trading at a higher price by this time next year. Should you invest $1,000 in Datadog right now? Before you buy stock in Datadog, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Datadog wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!* Now, it's worth noting Stock Advisor 's total average return is907% — a market-crushing outperformance compared to163%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 5, 2025
Yahoo
17-04-2025
- Business
- Yahoo
Prediction: 2 Growth Stocks That Will Be Worth More Than Block 2 Years From Now
Block (NYSE: XYZ), the fintech company formerly known as Square, was once a hot growth stock. It went public in 2015, and its revenue grew at a compound annual growth rate (CAGR) of 55% from 2015 to 2021. That growth was fueled by the expansion of Square's digital payment platform and the popularity of its Cash app for peer-to-peer payments, Bitcoin transactions, and commission-free stock trades. But from 2021 to 2024, Block's revenue only rose at a CAGR of 11%. From 2024 to 2027, analysts expect its revenue to grow at a CAGR of 9%. Three headwinds are curbing its growth: competition from other digital payment platforms, inflationary headwinds for consumer spending, and elevated interest rates, which are dragging down Bitcoin, keeping investors from actively trading, and compressing its valuations. Its earnings per share (EPS) is only expected to grow at a CAGR of 1% from 2024 to 2027. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Block has a market cap of $33.4 billion, and it looks reasonably valued at 22 times forward earnings estimates and 1.3 times this year's estimated sales. Assuming it matches analysts' expectations and still trades at the same price-to-sales ratio by the beginning of 2027, its market cap could grow by about 22% to $40.7 billion over the next two years. That would be a decent gain, but Block's high-growth days might be over unless it finds fresh ways to revive its maturing fintech business. Meanwhile, two higher-growth tech stocks with smaller market caps -- Datadog (NASDAQ: DDOG) and Zscaler (NASDAQ: ZS) -- could easily outperform Block and eclipse its market cap in just two years. I predict they will. Many companies run a broad range of software applications across different computing platforms. That fragmentation makes it tough for IT professionals to fix software problems quickly. Datadog addresses those challenges by breaking down those silos, monitoring all of those applications in real time, and aggregating that diagnostic data onto unified dashboards. It also feeds that data into its Bits AI generative AI chatbot, which makes it much easier for IT professionals to fix their software problems. That streamlined approach has impressed a lot of companies, and it faces far fewer macro headwinds than Block and other consumer-dependent companies. From 2020 to 2024, Datadog's revenue grew at a CAGR of 45% as its number of large customers (which generate more than $100,000 in annual recurring revenue) by the end of the year nearly tripled. It also turned profitable on a generally accepted accounting principles (GAAP) basis in 2023, and its net income nearly quadrupled in 2024. From 2024 to 2027, analysts expect Datadog's revenue and GAAP to grow at a CAGR of 21% and 20%, respectively. Its stock isn't cheap at 10 times this year's sales, but its early mover's advantage in its niche market and the stickiness of its ecosystem could justify that higher valuation. If Datadog matches analysts' expectations and still trades at 10 times its forward sales by the beginning of 2027, its market cap could swell 50% from $31.5 billion to $47.3 billion over the next two years. Zscaler is a cybersecurity company that provides "zero-trust" tools that treat everyone -- including a company's top executives -- as potential threats. In the past, many cybersecurity companies installed these services through on-site hardware devices. However, that approach took up lots of room, required constant on-site maintenance, and was expensive to scale as an organization expanded. Zscaler solves those problems by only providing its zero-trust tools as cloud-native services. That simpler approach drew in a lot of customers. From fiscal 2019 to fiscal 2024 (which ended last July), its revenue grew at a CAGR of 48%. Today, it serves more than 7,500 customers, including 30% of the Forbes Global 2000. It's also naturally insulated from the macro headwinds because its clients generally won't shut off their digital defenses to save a few dollars. From 2024 to 2027, analysts expect its revenue to rise at a CAGR of 21% as it turns profitable by the final year. Its business is maturing, but its niche in the cybersecurity market might have a brighter future than that of cooling fintech companies like Block. With a market cap of $30.6 billion, Zscaler isn't cheap at 11.5 times this year's sales. But if it maintains its premium valuation and matches Wall Street's estimates, its market cap could grow about 45% to $44.3 billion by the beginning of 2027. Before you buy stock in Datadog, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Datadog wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $526,499!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $687,684!* Now, it's worth noting Stock Advisor's total average return is 818% — a market-crushing outperformance compared to 156% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 14, 2025 Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, Datadog, and Zscaler. The Motley Fool has a disclosure policy. Prediction: 2 Growth Stocks That Will Be Worth More Than Block 2 Years From Now was originally published by The Motley Fool Sign in to access your portfolio
