10 Best SaaS Stocks to Buy According to Hedge Funds

7. Datadog, Inc. (NASDAQ:DDOG)

With significant hedge fund interest, Datadog, Inc. (NASDAQ:DDOG) secures a spot on our list of the 10 best SaaS stocks to buy according to hedge funds. As of Q1 2026, 80 hedge funds held bullish positions in the stock, representing $2.54 billion in aggregate value.

On May 27, 2026, BofA raised its price target on Datadog, Inc. (NASDAQ:DDOG) to $260 from $225 and kept a “Buy” rating on the shares. The firm expects demand for best-of-breed observability and security platforms to grow as enterprises modernize to the cloud and AI adds complexity to their environments. BofA told investors it sees those dynamics driving continued strong results from the company.

That view followed a solid first quarter.

On May 7, 2026, Datadog, Inc. (NASDAQ:DDOG) reported revenue of $1.006 billion, up 32% year-over-year. Non-GAAP EPS came in at $0.60, with non-GAAP operating income of $223 million and a 22% non-GAAP operating margin. Operating cash flow was $335 million, and free cash flow reached $289 million. The company ended the quarter with $4.8 billion in cash, cash equivalents, and marketable securities.

Customer growth also continued, as Datadog, Inc. (NASDAQ:DDOG) had about 4,550 customers with ARR of $100,000 or more as of March 31, 2026, up 21% from roughly 3,770 a year earlier.

Looking ahead, Datadog, Inc. (NASDAQ:DDOG) guided for second-quarter revenue of $1.07 billion to $1.08 billion and non-GAAP EPS of $0.57 to $0.59. For the full year, the company expects revenue of $4.30 billion to $4.34 billion and non-GAAP EPS of $2.36 to $2.44.

Datadog, Inc. (NASDAQ:DDOG) is a SaaS-based observability and security platform that provides cloud monitoring, analytics, and cybersecurity solutions for applications and infrastructure.